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If You Direct Import Children’s Products, Read This!

Guest Blog by Quin D. Dodd, Esq.

Once upon a time the U.S. Consumer Product Safety Commission (CPSC) was a rather quiet federal regulatory agency, tucked away in the Washington suburb of Bethesda, Maryland.  Then came 2007, dubbed “The Year of the Recall,” with lead-contaminated toys from China grabbing weekly headlines.  Congress reacted by passing the most sweeping reforms to the laws governing the safety of children’s products since the inception of the agency—the Consumer Product Safety Improvement Act of 2008 (CPSIA).

In addition to imposing strict new limits for lead, phthalates and durable nursery products, among others, the CPSIA culminated on February 8, 2013 into what has been called “The Mother of all CPSC Regulations”— the Testing and Certification Rule (or “1107 Rule,” codified at 16 CFR 1107).  This rule sets forth very specific testing, record keeping and other requirements for U.S. importers and domestic manufacturers of children’s products – any product “primarily intended” for children 12 years old and younger.  In a nutshell, this rule requires that U.S. importers and domestic manufacturers of children’s products:

  • Order CPSC-approved lab testing and certify that those products meet all applicable CPSC standards, including documenting and appropriately responding to any sample failure;
  • Undertake additional testing of the product after certification and during manufacture of the product (how frequently is unspecified but must impart a “high degree of assurance” that all products meet all CPSC standards);
  • Monitor and document any “material change” to the product that could affect compliance with standards; and
  • Implement company policies and employee training to prevent any attempts at “undue influence” over test labs (effectively, any attempts to skew test results).

The 1107 Rule presents a unique challenge for U.S. retailers who direct-import children’s products:  they just buy and import the products; they don’t make them.  Short of opening an office in every overseas factory from which they source, how are direct-import retailers in the U.S. supposed to ensure that all these requirements are met?

The answer lies in two additional CPSC-regulations recently passed:

1.              Component Part Testing (“1109”) Rule.  This regulation allows the U.S. importer to rely on a certificate from an overseas supplier to, in turn, issue the CPSC-mandated product certificate prior to importation, so long as “due care” is exercised to ensure that the supplier did what is required of them under the 1107 Rule.  Cutting through the regulatory jargon, this means that the U.S. importer should require the overseas supplier provide proof that they undertook all the necessary activities and obtained all the necessary documentation under the 1107 Rule.

2.              HDXRF and Other “Alternative” Test Methods.  As stated, the 1107 Rule requires some testing during actual manufacture of children’s products, in addition to that for certification.  That testing, however, can be either via a third-party lab (“periodic testing”) or on-site factory (“production”) testing.   Regardless of which avenue the U.S. retailer  or supplier may choose, on February 20, 2013, the CPSC for the first time allowed High Definition X-ray Fluorescence (HDXRF) to be used for both lead paint AND substrate (content) testing.  Unlike traditional “wet chemistry,” HDXRF technology is non-destructive and available for use in both portable and benchtop instruments, making it easy to use in either a lab or factory setting. Since lead is the number one source of seizures at U.S. ports,  HDXRF represents a major cost-saving opportunity for either periodic or production testing under the 1107 Rule for both suppliers and U.S. importer-retailers.

The 1107 Rule, while complex and not necessarily a fun read, is manageable.  Just make sure you deal with it now, before the CPSC asks you why, as an importer of record, you failed to do so.

Quin Dodd is a Washington, DC attorney practicing exclusively in the area of product safety law, and formerly served as Chief of Staff of the CPSC from 2006 to 2008.  He may be reached at:  quin@quindoddlaw.com. 

J.C. Penney Co. – Start With People

Guest Blog by Lior Arussy

The Wall Street Journal recently reported on the low employee morale inherited by J.C. Penney’s returning CEO, Myron “Mike” Ullman, after the chain slashed its workforce by tens of thousands over the past year. Retail is not just a business of merchandising and discounts, as it has been portrayed by the media in the last week since the department-store chain ousted its former chief executive Ron Johnson.  Retail is a people business as well, which Mr. Johnson clearly did not understand.

Creating a new retail platform, as was attempted with the “JCP” branding platform, requires the organization to lean on its brand ambassadors.  If the transformation from J.C. Penney to JCP was executed as I’ve seen so many in the past, regardless of executive’s intentions, it probably sounded to employees as “Everything you have done so far was wrong, this is the new right.”  Or perhaps, “Even our name is old an outdated, so we’re changing it.” Even without thousands of layoffs, a poorly planned and executed transformation will quickly create low employee morale. Now imagine the thousands and thousands of employees who face customers every day. What expression do you think they have on their face? How keen are they to help their customers? What is their attitude towards confused customers who are looking for a discount?

J.C. Penney must focus on its people first.  Every day, its 116,000 employees are making decisions that will amount to its brand equity.  Every organization’s brand equity is equal to the sum total of their employees’ decisions both in front of the customer and behind the scenes on behalf of the customer. If employees are enthusiastic, passionate and caring, customers will make purchases.  People do not buy from cynical uncaring employees. (Check out www.cyncismkills.com.)

The human factor is the most elusive and challenging in every corporate strategy.  The good news is, if you unlock your workforce’s energy, they will not only meet, but exceed, your customer’s expectations. Here are my best, most heartfelt ideas for Mr. Ullman:

  1. Start thinking in terms of employee engagement. Measure your workforce’s state of mind, the true pulse of the organization. Involve your employees in valuable discussions and lean on them to help strategize and design your next moves.
  2. Create a cause to which people can connect. Stop designing transformations around stockholders and stakeholders. Instead, focus on fulfilling your customer’s needs and positively impacting their lives.
  3. Give employees a reason to have pride in the brand. Yes, brand pride is key to your future success. Connect your people to J.C. Penney’s heritage and develop a clear program to disseminate that emotional bond throughout the organization and beyond.
  4. Embrace empowerment. Equip every manager with the tools and authority to engage their employees.
  5. Innovate and then innovate some more. Establish small teams across all levels of the organization and provide them a forum for generating new ideas and leading initiatives to delight customers.
  6. Give employees the power to delight. Provide employees the opportunity to deliver great experiences that will increase loyalty and customer profitability.
  7. Celebrate the customer heroes. Establish a sustainable culture that is committed to recognizing and rewarding its customer heroes.
  8. Repeatedly connect back to the cause. Make sure employees can see the progress made on the goals to reach the organization’s vision and fulfill its higher cause.

As we all know, history often repeats itself. The now defunct Circuit City fired its top sales people because they were too costly and just two years later filed for bankruptcy. Any company strategy that does not embrace fully the role of the organization’s employees, fails to understand a very simple truth.  In the moment of truth, when a customer and employee connect, the brand is created. How the employee chooses to engage the customer at that moment of truth, will determine if the corporate strategy will succeed or fail.

Apple’s retail success was highly dependent on the spirit of its employees. There was no evidence that a similar spirit was developed at the JCP brand.  Whatever spirit the J.C. Penney workforce had a year ago has been most likely destroyed a strategy that undermined them and not only by the job cuts. Although it’s easy to rely heavily on merchandising, store design and slick advertising, take heed that employee morale is a force that cannot be ignored.

The opportunity that Mr. Ullman is inheriting is quite significant; if he can take the 116,000 J.C. Penney employees and inspire them to be brand ambassadors, he will create a tsunami of positive brand loyalty and profits.  The good news is that with the right approach, morale can be turned and cynicism can be transformed to passion. I wish Mr. Ullman good luck on his journey.

Lior Arussy is CEO of Strativity

Leverage the marketplace – convert a NON-BUYER into a BUYER

Guest Blog by David Zahn

Conventional wisdom in retailers and FMCG manufacturers focuses on growing the business by maximizing market share and increasing conversion among existing shoppers /consumers.  By targeting this population, it is assumed to be more efficient and productive than trying to convince those do not currently shop at a store or in a category to become shoppers at that outlet or in that aisle.

However, for REAL growth to occur, we have to actually leverage the marketplace where we have been hesitant to go – at NON-CONSUMPTION. Historically and conventionally, we have believed that it is harder to convert a NON-BUYER into a BUYER than it is to get someone to switch. And, while there is both intuitive logic to that and plenty of proof to lean on; that does not grow the market in total. For that to occur, the shopper has to make incremental purchases and not just swap from one to another.

Looking at the matrix below, labeled Four Types of Shopping, you see in the lower-left quadrant  how the shopper makes routinized purchases that are not impacted by the information currently available from the store or manufacturer, nor does the shopper particularly seek additional information.  Moving to the right; the lower right-hand quadrant shows the shopper seeking a solution or to meet a job, but being stymied by the lack of news or communication from the store or brand on how to accomplish that job with the products currently available.  Moving up to the upper-left quadrant; the manufacturer and store focus on switching behaviors between existing options – and while it may re-allocate the shares, profits, and sales dollars among competitors, it is not creating growth or incremental sales of any substantial amount.  The only way to grow the TOTAL business in a sustained way is to provide context, information, decision-support, and assistance to the shopper through an improved Ecosystem that aligns with the shopper’s desire to accomplish a new job or an existing job in a more successful way. Therefore, what is required is a better understanding of the jobs the shopper wishes to master and what requirements must be in place for that to lead to a purchase of a product (or combination of products purchased in concert).  Simply relying on so-called “causal data” or studying “panel data” will be helpful; but insufficient in that it is not tracking and seeking to understand the decision-making process of the shopper.  It is attempting to link correlational data (a sale occurred under this condition) and assumes it is directly responsible for the purchase.  In fact, that is rarely accurate.  The missing piece is an understanding what the purchase is designed to provide – and not simply the occurrence of a purchase.  By better understanding what the shopper is attempting to accomplish, and participating in that vision, the retailer and manufacturer can better position their offerings to accomplish that outcome.

As an example, review the following example of a “typical shopper’s experience.”Now, imagine if Mary were able to engage in her pursuit in a way that resembled a mutual effort.

If the store and brand understood what she was seeking to do and helped her think through it and make a more confident choice, they could provide the right resources and tools to aid her (and build their own businesses at the same time!).

The process is a nine-step process as defined below that begins with identifying the shopper’s job(s) and then working to identify how to best provide that within the context of the business’ capabilities, strategies, resources, and commitment.

 

 The technology/process depicted above contains a tool that focuses insights and prospective actions through a “QFD-Like” technique (QFD = Quality Function Deployment – a process used by progressive innovators to design quality into products to meet user demand) that allows for easy identification of successful initiatives and gap analysis hampering success from occurring.  This technique allows for quicker, less expensive, and more accurate decisions regarding: new item introductions, category management initiatives, shopper marketing activities, and in-store activities.

For more information on the process, please contact David Zahn, of ZAHN Consulting, LLC at davidzahn@zahnconsulting.com.

Winning Over the Right Customers

Guest Blog By David King

Many retailers still rely on fairly simple rules to target merchandising offers to customers. Historically, the bulk of targeted customers are those who have either made purchases in the product category or within a specific brand in the category. Makes sense, right? It’s a tried and true formula that works because such customers are likely to repurchase in the same category or brand. Yet, this approach does little grow the category share; The traditionally targeted customers are already spending in the category and new customers aren’t being enticed to expand their spending habits within the category.

Recently, retailers have found success looking at “winnable share” at the product category level. With this approach, the potential of each customer to spend in a category is estimated and the more potential a customer has, the better the target.

For example, let’s say we have two customers: “Bob” who spends $60 per month on bread and “Mary” who spends $10 per month. The traditional approach would favor Bob for promotional offers, but that $60 might mean that his spending potential is maxed out. In other words, targeting Bob with a promotion will not increase his spending in the category because $60 represents the most that he would ever spend. By contrast, Mary might have the same $60 potential, but $50 is being spent at another store. She has a much higher winnable share than Bob. Naturally, this approach will also uncover some high-spending customers that have still more potential.

Here’s a quick chart of what we might see:

Customer             Current Spending                                Estimated Potential                         Winnable Share

Bob                          $60.00                                                        $60.00                                                $0.00

Mary                        $10.00                                                        $60.00                                                $50.00

Sharon                    $50.00                                                        $80.00                                                $30.00

An immediate question that we face is whether those customers with a higher winnable share will respond to promotions. In most cases, they do, which means that a category manager can both generate near-term sales and build higher share.

Having an understanding of customer potential at the category level also enables two additional merchandising activities.

First, it provides managers with an overall potential for the customer base by category. This allows them to work with vendors on designing merchandising programs that achieve the best sales outcomes, both for the vendor and for the store. On a macro level, it allows management to estimate whether their potential category share is growing or shrinking and why. For instance, perhaps winnable share is stable, but sales are struggling due to ineffective promotions. Management teams can use this information to fix the fundamental efficiency issues.

A second use is in designing cross-category promotions. Let’s say that a retailer is thinking about promoting denim to sweater buyers. We would want to use our intelligence about customers’ winnable share in denim to select customers. If we’re actually making an offer in both categories — “buy a sweater and jeans together and get 20% off both” — then winnable share in both categories is useful.

In short, retailers and merchandisers are accomplishing two primary objectives as a result of moving toward understanding each customer’s winnable share by category: driving sales for current promotions by selecting the customers that will respond; and building gains in category share by pulling in new customers that would be ignored by traditional targeting efforts.

David King is executive vice president at Fulcrum

Retain More Customers and Reach New Clients with Mobile Shopping Apps

Guest Blog by Saeed Sikiru

With the increase usage of mobile gadgets with built-in web browsers in them, there’s no better time to go digital than this era. Your products catalog may no longer be as effective as it used to.

According to studies gleaned by eMarketer, mobile shopping apps may have some influence in your relationship with your customers. Additionally, mobile device users revealed that utilizing a shopping app enhanced their relationship with their favorite brands. And most of them liked the brand even more after using a shopping app.

In another research by Flurry, consumers spend more time on retailers’ mobile apps comparing prices, discovering new products, daily deals, and making purchases. Furthermore, one out of five mobile users confirmed they would download a shopping app on their mobile device in order to get acquainted with a brand.

This indicates that mobile device users utilize apps for discovering products. Instead of visiting a brand’s website or a nearby store, they prefer to download a brand’s mobile shopping app to examine its products or offers. In a nutshell, mobile shopping apps now serve as catalogs.

The Benefit of Developing a Mobile Shopping App for Your Business

Companies that have developed mobile shopping apps have been able to retain lots of their customers. This is because they keep their clients updated with new and relevant offers via their mobile apps. And customers have demonstrated their loyalty through purchases made directly from their shopping apps.

Factors to consider before developing mobile shopping apps

Now that you’re aware of the power of mobile shopping apps in retail business, it’s about time you consider developing one for your business.

The first step to developing mobile shopping apps is to understand your target audience, what they want, and the technologies that they like, and how best you can offer them a good user experience.

One way to achieve this is by identifying the outlets that your customers are likely using, and taking the time to explore these platforms to gain an understanding of each user experience.

Another simple but effective way is to emulate your competitors. You can download their mobile shopping apps on your mobile gadget and familiarize yourself with it. Based on that, you’ll be able to come up with ideas for your own shopping apps, and even improve some areas that you think your competitors have flaws.

Additionally, discussing your goal with mobile application developers will help you gain lots of insights from them. Being professionals in application development, app developers are idea for offering valuable advice to achieve your overall goal.

How to promote your shopping apps after creation

With millions of apps available for download out there, it can be extremely difficult for new mobile apps to gain footing after development. Fortunately, there are some strategies that you can use to make your new mobile app spread like wildfire. The following are a few ways you can promote your new mobile apps.

Make your apps available on apps stores, promote them on your social media outlets, and encourage referrals through your clients. According to a survey of mobile apps users, 42% said they usually discover new shopping apps at their favorite apps stores. 37% also said that they hear about new apps from friends who have utilized the apps before. Furthermore, social media outlets such as Facebook and Twitter are proven to be powerful tools for promoting new mobile shopping apps.

In this technology driven era, relying so much on traditional product catalogs for promoting your products and new offers may affect your sales tremendously. With the increase usage of mobile gadgets for doing almost everything in our lives these days, mobile shopping apps are the new tools for promoting products and new offers. And retailers who are using shopping apps are already reaping the benefits.

Saeed Sikiru is a prolific freelance blogger. He’s the editor of a content marketing blog where he offers his freelance blogging service. If you have a blog that needs regular content, hire Saeed to write quality and persuasive articles for you.

Retailers Facing Unclaimed Property Issues Around Unclaimed Gift Cards

Guest blog by Jennifer Borden

We’re a few months removed from the holidays and, once again, gift cards were one of the top gift items of the season. From Yankee Swaps to the last minute gift for your babysitter, it’s easy to understand why: they’re convenient and one size fits all. But the question is, how many of those cards will never be redeemed? Despite their popularity, it’s projected that $2 billion of gift cards went unused in 2012.

That’s unfortunate for the recipient of the gift card. But what about the retailer?

There are legitimate questions as to how, when and by whom the gift cards should be regulated. There is ongoing contention between the federal and state governments as to who should be regulating gift cards.  New Jersey is in the midst of a multi-year dispute in federal court over whether national retailers should be subjected to onerous state requirements that clearly conflict with United States Supreme Court precedent.  The Office of the Comptroller of the Currency has weighed in, along with other federal agencies, and the newly formed Consumer Financial Protection Bureau is challenging states’ regulation in this arena.  This presents a huge compliance and unclaimed property predicament for retailers, especially on the heels of so many changes over the last couple of years that leave companies more vulnerable to audits and escheatment than they thought they were.

So how do retailers try to attack the challenge?

In many cases the legal entity that issues gift cards for retailers is incorporated in a state that does not escheat gift cards.  Since gift cards are typically “owner unknown”, and the property escheats to the holder’s state of incorporation, unredeemed gift cards should be exempt from escheatment. But states are saying, not so fast. Occasionally these special purpose entities were not established properly and therefore can’t withstand audit scrutiny. In one case a major retailer did not follow corporate formalities and the entity issuing the gift card had been administratively dissolved by its state of incorporation.  Without the retailer even knowing it, the gift cards that were issued by the legally defunct entity may have lost the benefit of the exemption, potentially resulting in millions of dollars in liability.

In another case, gift cards were issued as a result of loyalty programs, so the issuer knew the identity of the recipients.  Do these cards still get the benefit of being “owner unknown” ‘and subject to the favorable escheat rules of the state of incorporation of their issuer?  Or is the retailer now once again subject to the laws of each jurisdiction in which it has customers?

Another fairly new risk is the abundance of third party involvement in the issuing of gift cards. When a store like CVS or Walgreens carries gift cards from a variety of retailers and restaurants, who’s obligated to the value held on those cards, and what is the value that is potentially escheatable? Is it the retailer who accepted the cash for the card?  Or is the retailer where the card will ultimately be presented?  What is the amount that is potentially at risk on a $25 card that does not get redeemed?  Is it the full $25 paid, even though the issuer may only receive about $20 after paying for distribution and sales commissions?

So if you’re a retailer, how can you protect yourself from audits and unclaimed property violations if you are issuing gift cards to your consumers? The same way you get a tune-up for your car every 30,000 miles. It doesn’t hurt to do a check up every 24 months. It’s likely that there have been regulation changes or lobbying that could impact your exemption. You also want to ensure your SPE is holding strong, all corporate formalities are being respected and that you’re still protected as anticipated when the SPE was formed.

Jennifer Borden is EVP and general counsel specializing in unclaimed property issues for UPRR. She can be found at uprrinc.com.

Retailers Can’t Rest on Their Mobile App Laurels

Guest Blog by Steve Wellen

Mobile retail was sometimes perceived as a bandwagon, and it has turned out to be the boat that no one can afford to miss. Now, retailers are discovering that even with a mobile site, they need better data to turn opportunity into revenue.

Back in 2009, Forrester Research Group forecasted that online retail would reach $229 billion in 2013. It was a cautiously optimistic gauge that had us all crossing our fingers in the heat of America’s mini-Depression.

But the economy had even better plans than Forrester—or anyone—could have anticipated. In 2012, online retail hit $226 billion, and Forrester now anticipates $252 billion before we raise our glasses to a new year again.

And in the middle of it all, we find mobile retail.

In a recent retail article, 14 executives weighed in on 2013 retail predictions, and everyone mentioned mobile retailing, showing that mobile has graduated from “up-and-coming” to “here-and-now.” During Thanksgiving 2012, 24% of consumers used a mobile device to visit a retailer’s site, up from 14.3% in 2011 (IBM report). Black Friday alone saw 16.3% of all purchases conducted on a mobile device. At an invitation-only Salesforce event in New York on February 26, Marc Benioff said that every company is now a software company—we all have apps, we all have to deal with UI, and our customers all hold our brands ransom for an exceptional mobile experience.

But the increase in mobile activity and mobile demand doesn’t mean that we’re doing mobile better. For example, we see that JC Penney has had a mobile version of its site and yet reported double digit losses both online and in store. Google pretty much is the Internet, but their Nexus 4 retail launch was a disaster. Showrooming and other cross-channel challenges continue to get in the way of success for online retailers everywhere.

So if having a mobile site isn’t the differentiator between online success and failure, then what is?

First of all, there is no single great differentiator—otherwise known as a “silver bullet.” But from my perspective at Domo, I would posit that the online retailers we work with see a massive shift in opportunity and revenue when they are able to get a handle on their data.

Here are the data problems that retailers face:

  1. Big data, per se, does not equal big insights into customer needs.
  2. Disconnected data sources leave holes in customer info that need to be filled.
  3. Investments in new data sources aren’t delivering the expected value.

It’s not a data quantity issue, and it’s not even a data quality issue. It’s a data access and reporting issue. Most retailers have plenty of data; they just can’t get it how they want it, when they need it.

Collecting data, assembling data and analyzing data are still several steps away from actually using data to improve your mobile site. Disparate data sources are good at telling you a few things about your mobile sites—CTR, time on page, page views, cart abandonment, etc. But connecting it to social media, finance, fulfillment, POS, cross-channel metrics, and more is a matter of static spreadsheets, human error and late numbers. And that’s where brands stumble.

When retailers can get updated metrics from all their data in one place, mobile websites and apps will start to provide the experience customers want and the revenue opportunities that retailers need.

Steve Wellen is VP of Client Services with Domo

Marketers Must Blend Print and Digital to Reach Today’s On-the-go Consumer

Guest Blog by Suzie Brown

Deals and savings are now a part of consumers’ regular shopping experience as they seek savings from multiple sources and digital deals continue to evolve. They are gaining attention in the media and among consumers as interest in deal seeking remains strong. Just as consumers are exploring new ways to get a deal, marketers also are testing various methods to attract today’s shopper. There will continue to be a blend of traditional and new media as consumers seek value in planning their purchases.

According to the NCH Marketing Services Inc. Coupon Facts Report, consumer packaged goods (CPG) marketers used the free standing insert to distribute the largest volume of all their coupons in 2012, increasing the media’s share to 90.1% of the 305 billion coupons issued. Marketers continue to experiment with the audience reach and scale potential of various digital media.

Tablets and smartphones are changing consumer behaviors by adding greater freedom, portability and personalized experiences as users simply tap to get email, news, information and entertainment on demand. As the digital world moves with speed, marketers are continually challenged not only to stay abreast of this changing media environment but also to get ahead of it.

Consider this:

  • U.S. adults are spending one-third of their media time with digital (Scarborough multi-Market August 2012);
  • 70% of mobile searches result in action within one hour  (Mobile Marketer, June 2012);
  • 14% of U.S. adults own a tablet today– up 400% in the last 12 months (Nielsen, Jan. 2012).
  • Beyond print-at-home, paperless coupons are being made available via retailer websites to download offers primarily as a feature of a retailer’s loyalty card program. In some cases, these offers are targeted to consumers based on their shopping behaviors and opt-in interests; and
  • All paperless vehicles combined, including mobile, have grown to represent a little more than 1% of all coupons redeemed.

The traditional path to purchase was linear and brought the consumer from awareness to action one step at a time. Depending on the business objective, media choices were clear-cut. Today, consumers are in control and their media habits, which are changing at a remarkable rate.  The once linear path to purchase has evolved requiring that advertisers use a mix of media to stay both visible and relevant throughout the consumers varied decision making cycle/matrix. Valassis has a proprietary advantage of delivering targeted, print and digital solutions to engage consumers at every point along the path to purchase.

For years, we have heard that the consumer is king, and this rings so true today. Marketers must rethink the ways they understand and activate this value-centric consumer. Shoppers now choose how and where they want to receive their advertising, and for that matter, what they receive. A dynamic integrated media plan with traditional and new media provides high visibility, flexibility and efficiency for both national and local campaigns, and delivers value where consumers plan, shop, buy and share.

Valassis is Re-Imagining Reach for the way today’s consumer plans, shops and purchases, providing clients with a means to reach consumers both offline and online. Advertisers need to incorporate a blended approach of both traditional and digital promotions to reach and activate today’s deal-seeking consumer.

Suzie Brown, Executive Vice President of Sales and Marketing at Valassis, has more than 25 years of industry experience in media, advertising and consumer promotion. Valassis is a leader in intelligent media delivery, providing over 15,000 advertisers proven and innovative media solutions to influence consumers wherever they plan, shop, buy and share. 

Five Things Your Retail Customers Expect This Year (Hint, Quality Experiences Is One of Them)

Guest Blog By Michael Hemsey

For Toys “R” Us, February has not been a good month. The global retailer’s CEO, Gerald Storch stepped down after the company failed to hit revenue targets, as well as lackluster same store and overall store sales during the 2012 holiday season. While Toys “R” Us’ recent miss stems from heightened discount competition, some of the company’s shortcomings might be internal too – hyper-reliance on excessive discounts.

Discounts, as we have seen, can do a lot of damage.

But at least there’s a lesson to be learned by other retailers. Despite Storch being credited for heralding an omnichannel strategy at Toys “R” Us, relying heavily on in-store and merchandising across multiple channels, increasingly, consumers are striving for quality brand experiences as much as they seek quality prices.

And with experiences being central to customer engagement and loyalty, here are five things that retail customers can expect more of this year:

#1. The continued rise of corporate philanthropy and brand social awareness: Panera Bread is a good example. While the brand is spending some $70 million on its “Live Consciously” campaign through multiple channels, its Panera Bread Foundation established Panera Cares Cafés. These are places offering variable pricing based on customers’ ability to pay, if at all. Instances like this support recent eMarketer data which finds 56% of US Internet users have purchased a product based on a brand’s cause allegiances.

#2. An increase in loyalty program transparency, where fewer hoops means happier customers: It should be obvious – shoppers want the most bang for their loyalty buck. Consider gas stations. Most gas station loyalty programs’ link their rewards to convenience store purchases. But British Petroleum is changing that with its BP Driver Rewards program. Starting in April 2013, BP will launch a new loyalty program where consumers earn 5 cents off every gallon of gas they pump, after the first 20 gallons. Consumers will see direct savings for buying something they already need: fuel. Similarly, Winn Dixie’s Fuelperks program earns users 5 cents off per gallon pumped at Shell stations for every $50 they spend in groceries.  Simple, honest and direct loyalty programs mean business and retailers are eager to jump on board.

#3. Customer engagement that uses 21st century Big Data metrics to drive traditional outreach: Or as Claud Cecil Gurney, founder of design firm de Gournay describes a consumer purchase: “[Feeling] like something they’ve created for themselves rather than something that’s been bought off a shelf and stuck in their house.” Accomplishing that genuineness requires constant engagement across all channels. It also requires acting on gathered data which is a central tenet of the omnichannel loyalty experience, an enterprise-level initiative to drive, track, measure and reward incremental behavior throughout the enterprise and customer experience.

#4. The improved organization and de-siloing of Big Data: This one’s a no-brainer but it bears repeating. A recent Forbes article discusses how brands should opt for a single “golden version” of customer data and maximize engagement by taking a holistic view of the customer. To me, this sounds a lot like convergence and the need to bring loyalty data and traditional CRM data under one de-siloed roof. Forbes refers to it as “master data management.” Whatever you call it, convergence is key. The good news is that, according to a 2012 Retail Horizons report, nearly 67% of retailers surveyed ranked customer satisfaction as their top strategic initiative for 2012. Another 82% said customer service strategies would be top priority, up from 75% the year before. If that was the sentiment in 2012, you can be sure 2013 will be just as intense.

#5. Growth of alternative forms of payment: We’ve written about the increasing popularity of mobile wallets and the brand possibilities that come with Apple’s Passbook app. But here’s another take. Walmart is expanding use of its iPhone “Scan & Go” app to 40 Denver, Co. stores. The app allows customers to scan products while they’re shopping. When they’re done, the app organizes purchases under a single QR code that can be read by QR-equipped readers at checkout. Think of Apple stores, where salespeople are on hand to scan products throughout the store. There’s no checkout line. Walmart’s experiment is proving similarly effective in streamlining the in-store shopping and checkout process.

And if Walmart’s doing it, others will follow.

But as Toys “R” Us begins the search for a CEO, it would be wise for it – and other retailers – to keep these five customer expectations in mind. An omnichannel approach is great and competitive prices are too. But that’s just the first step toward enhancing loyalty and driving ROI. Enhanced social good, loyalty program transparency, Big Data and the use of its metrics in a de-siloed data environment, and one that relies on innovative payment methods are increasingly vital components to include in the loyalty mix.

Michael Hemsey is president of Kobie Marketing

Blending behavioral data with demographics to drive loyalty

Guest Blog by Millie Park

A recent Forrester report showed that compared to older generations, 18-to-24-year-olds don’t mind that their data is being shared online. According to the report, only 33 percent say they are concerned about access to their behavioral data. By contrast, 47 percent of 55-to-64-year-olds said they were worried about that kind of access. Also, the younger group is more willing to exchange personal data in exchange for discounts. Clearly, brands should target younger demographics to share data and make online purchases, right?  Well, not entirely. As the saying goes, actions speak louder than words.  In this case, actions speak louder than age.

Marketers are continuously trying to improve their understanding of demographics. That’s great, but in my opinion, this can also be limiting. This particular study doesn’t necessarily tell me that 18-24 year olds are the best demographic for retailers to target online. In fact, the glass is more than half full with the 55-64 year old demographic where 53% do see value in using online data. Uncle Ray is on Facebook, “liking” your products and services. Grandma Helen is on Pinterest pinning recipes and sweaters to knit.  Don’t succumb to the ageism trap – they are engAGEd. Think beyond targeting individuals based on demographics. Marketers should focus on blending demographics (like age) with customer behavior, preferences and purchases, to personalize the online experience and negate any concerns about sharing behavioral data. Prince almost had it right when he sang, “Act your age not your shoe size”. Marketers should USE your age AND your shoe size.

We’ve seen consumers flock to where they have a great experience, no matter the demographic. The same applies to online interactions. As a marketer, if you have profile data and/or collect behavioral data about visitors to your site, then use it to your advantage. Use it to drive that great experience. Use it to show the customer you know them. Use it to show the customer you care. Don’t use it to exclude or downplay age groups – combine it with demographic data to build a powerful customer profile. And if you are given the privilege of using customer data, treat it with respect. Don’t ask for it unless you’re going to use it and use it appropriately to drive a personalized experience. Remember, misuse and non-use of data will turn customers off – especially when it comes to explicit data customers give you, like preferences and birthdays.

All available data should be used to tailor offers and recommendations to individuals based on their history with you. How they interact with your site, what they view and search for, where they click, what they place in their carts, and ultimately what they purchase are all data points that you should fold into your personalization algorithms to use to drive the user experience. Continue to build an individual’s customer profile as you get to know them through various interactions. Add into the additional data like-demographics, product ratings, social data, and other third party data. Test to see what data truly moves the needle and what recommendations resonate with your customers. Now you’re really moving toward having your recommendations perform like a personal shopper.

By making it interesting and easy for the shopper to interact and transact with you, regardless of their age, you will be recognized with purchases and rewarded with loyalty. Age is nothing but a number. Loyalty lasts a lifetime.

Millie Park is Vice President and General Manager at ChoiceStream CONNECT