The document discusses expectations for holiday spending in 2010. It reports that a survey found over 42% of consumers plan to spend significantly less during the holidays compared to last year. However, Deloitte forecasts only a modest 2% increase in total spending. While consumer debt and unemployment remain problems, a small rise in online and non-store sales is expected. Overall, retailers should prepare for a still challenging season with tight budgets and a growing emphasis on e-commerce.

1. www.ngretailus.com • Q4 2010
Riding the recession
How the best retailers have
profited from the downturn
Survival of the fittest
Office Depot’s Steve Odland
on tackling tough times
Energy effectiveness
Philips Teletrol’s Andy McMillan
on improving the shopper
experience
Net
returns
How the web – through e-commerce, social networks and
smartphones – has changed the retail landscape forever
SUSTAINABLE RETAIL • DIGITAL SIGNAGE • WORKFORCE M ANAGEMENT • STORE DESIGN • PAYMENT SOLUTIONS
Cover NGRUS1.indd 1 08/10/2010 16:15

2. PHILIPS DPS.indd 1 01/10/2010 16:11

3. PHILIPS DPS.indd 2 01/10/2010 16:11

4. INTEL DPS AD.indd 1 01/10/2010 16:09

5. INTEL DPS AD.indd 2 01/10/2010 16:09

6. HARRIS AD.indd 1 01/10/2010 16:03

7. FROM THE EDITOR 5
Changing the retail
landscape – again
Why the mobile revolution has fundamentally altered the way we live and shop.
W
ith apologies to Ferris Bueller, technology that one in five consumers planned to use their mobile
“While mobile
moves pretty fast – if you don’t stop and phones to shop during the 2009 holiday season.
look around once in a while, you could retail is real now, Indeed, the variety of applications for mobile tech-
miss it. Mobile is just the latest disruptor it’s very quickly nology are huge. “We believe the true potential for
to revolutionize the way we interact with information. m-commerce is to provide consumers with a valuable
Picture the following scene: a group of friends
going to morph tool for research, comparison shopping and retailer
are sat in a pub, arguing over an obscure fact. In years into something interaction,” says Malcolm Pinkerton, Senior Analyst
gone by, the argument would have raged for hours, different from at Verdict Research, in our cover story. Google, mean-
with neither side willing to give an inch; these days, while, believes that mobile will also bring advantages
however, such debates are solved easily at the touch of
the types of location-based marketing and social media market-
a button via a simple Google query. Elsewhere, a com- of mobile ing to the mix and these, while not necessarily driving
muter on the way to an important meeting is stuck in functionality we direct sales from handsets, will provide the cornerstone
traffic; a real-time travel update means he is able to of the future shopping experience.
reroute his journey to get there on time. Meanwhile see today” The marketing whizz kids at Apple put it best: “This
a tourist is looking for somewhere to eat in a strange changes everything. Again.” In many ways, Apple’s
city; no problem, the location-aware software on her ad might represent excessive marketing industry
mobile phone instantly provides her with a range of hyperbole, but it does hold an essential truism: the
choices. mobile revolution has fundamentally altered the way
Mobile phones must be one of the best on-the- we live. More importantly, it also highlights another
spot information retrieval resources of all time – which truth – that while mobile retail is real now, it’s very
is why they are increasingly becoming the weapon quickly going to morph into something different from
of choice for a new army of consumers constantly in the types of mobile functionality we see today. We’ve
search of lower prices, better deals and greater infor- barely scratched the surface of what’s possible.
mation on everything from product comparisons to It’s hard to plan for a constantly evolving technology.
user satisfaction. With consumers relying on hand- However, retail execs cannot afford to take a backseat
held devices for everything from phone calls to web and wait for others to shape the mobile landscape. Ferris
surfing, retailers are looking to mobile as the next had it right: snooze and you’ll almost certainly lose.
frontier of the shopping experience.
Approximately 1.15 billion mobile handsets
shipped in 2009 around the globe, with smartphones
accounting for 81 percent of the estimate. eBay’s
iPhone app, launched earlier this year, has already
been downloaded in excess of 11 million times, and the
online auction giant is gunning for a whopping $1.5
billion in mobile sales this year; Amazon’s mobile site
traffic is second only to eBay among vendors of real-
world stuff, according to figures from Nielsen; while Ben Thompson
an annual survey from Deloitte last year that found Senior Editor
ED NOTE.indd 5 08/10/2010 16:15

8. MOTION COMPUTING AD.indd 1 05/10/2010 14:09

9. CONTENTS 7
28
Survival of the
fittest
Office Depot CEO
Steve Odland on
how the company
weathered the
downturn and is
now looking ahead
to a brighter future
60
76
Heart and sole
The art of
celling
With mobile
commerce set to
How Zappos has leapfrogged traditional stores revolutionize the
to become one of America’s favorite shopping retail environment,
destinations Ben Thompson
asks whether
the country’s
businesses are
ready for the next
wave of change
38
Riding the recession
As America recovers from
one of the most crippling
financial climates in the
country’s business history,
Lucy Douglas asks what a
retailer needs to succeed in
82
a recession?
Kindling customer
engagement
How CTO Werner Vogels
transformed Amazon.com
into the world’s most
customer-centric organization
CONTENTS.indd 7 11/10/2010 11:58

10. 8 CONTENTS
Regulars
12 The brief
A look at the forecast for holiday
spending
16 Global news
A round-up of the latest industry
events and trends from around
the world
48 Roundtable
A panel of experts give their
12
insight into the changing face of
retail marketing solutions
101 Lifestyle
Have we seen the final curtain
call for America’s favorite movie
rental store?
104 Travel
How to spend 36 hours in…
Las Vegas
34 Branding for the online
avenue
Next Generation Retail speaks to Saks Fifth
16
Avenue’s AJ Sutera about taking an exclusive
brand on to an accessible online platform
44 Blueprint for success
Why making the most of your costly
retail space can pay dividends in terms of
better branding and more active customer
engagement
54 Signs of the times
The Retail Advertising and Marketing
Association’s Mike Gatti reveals how digital
signage is going to revolutionize the retail
world
68 Taking on the online
challenge
101 104
Walgreens’ CTO Abhi Dhar explains how
the nation’s favorite bricks-and-mortar
drugstore successfully made the transition to
online powerhouse
CONTENTS.indd 8 08/10/2010 15:29

11. CONTENTS 9
70 Token efforts
Bob Griffin outlines the landscape of
retailers’ tokenization options
72 Engaging the social
consumer
Steve Madden’s Andrew Kovan speaks about
utilizing the growing social media platforms
to interact with customers
90
74 Return of the king
According to recent research from IBM, it is
consumers rather than stores that are driving
the rapidly evolving retail environment
86 A rewarding experience
Customer loyalty is consistently touted by
retailers across the country as a major area
of focus. So why do so few have a rewards
program that works for both them and their
clients?
88 Asset maximization: selling
your brand starts with your
talent
Jamie Minier, President of The Right Thing,
explains why a strong employment brand is
54 68
vital to attract top talent
90 Inside the hit factory
What keeps Starbucks’ HR department
awake at night? Clue: it’s not just the coffee
94 Energy effectiveness: getting
beyond energy efficiency
By Andy McMillan
96 Retail goes green
Why a growing number of retailers are
putting sustainability at the heart of their
business models
106 Less is more
Liz Claiborne’s Peter Warner speaks to Next
72
00
Generation Retail about keeping up with the
industry and how stripping a business back
to the bare essentials can provide the much
needed facelift to succeed in tough times
CONTENTS.indd 9 08/10/2010 15:29

12. The NG Retail US Summit
17-19th May 2011
Legal Information
Scottsdale, Arizona The advertising and articles appearing
within this publication reflect the
opinions and attitudes of their
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most influential and important executives from the retail industry. those of the publisher or editors.
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Associate Editor Lucy Douglas
Contributors Ian Clover, Rebecca
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CREDITS.indd 10 08/10/2010 15:29

13. ENQII AD.indd 1 01/10/2010 16:03

14. 12 THE BRIEF
’Tis the season to be spending?
By Nick Pryke
W
ith the obligatory Christmas run-up Beemer, Founder and CEO of ARG. “Never, in the 31
“Pessimism
hitting our screens, shops and internet, years I’ve been conducting research, have I seen such
you could be excused for thinking that among a pessimism. President Obama has pierced the side of
we’re already in December. Fortunately Americans about Lady Liberty, reducing the spirit of hope among con-
that’s not the case, but with the side effects of the the upcoming sumers as they wonder when the recession will ever
global recession hitting last year’s Christmas period end. Americans see massive government debt, more
with some force, researchers, analysts and retail play- Christmas home foreclosures in their neighbourhoods and little
ers are keen to do all they can to predict what the 2010 season is off the or no improvement in their local economy – even after
festive period holds in store – and early signs indicate charts” $1 trillion spent in government stimulus.”
that it could be another tough season for retailers. However, in somewhat of a contrast to Beemer’s
A survey recently conducted by America’s Research Britt Beemer, Founder statement, Deloitte has released its 2010 holiday
and CEO of ARG
Group (ARG) has confirmed that more than 42 percent spending forecast, in which it notes the most modest
of consumers plan to spend significantly less during of increases in consumer spending in comparison to
the festive season this year, compared with a mere 11.7 2009. Regardless, “sustained weakness in the hous-
percent who said they planned to spend more than ing and employment markets continue to restrict
they did the year previous. The near four-to-one ratio consumer cash flow,” says Carl Steidmann, Deloitte’s
saying they would spend less is above the two-to-one Chief Economist.
seen in 2009 – and even higher than the three-to-one “Consumers’ discretionary funds have dwindled
seen in the financial downturn that 2008 delivered. as households remain focused on reducing debt and
In addition, while 55 percent of people said that they increasing their savings. Should consumers receive
were in a better debt position this year than last, it good tidings later this season in the way of falling
certainly doesn’t mean that the purse strings have energy prices or additional stock market gains, they
been loosened, as credit-card companies have contin- may be able to lend retailers a bit more holiday cheer.
ued to tighten credit limits and increase interest rates. However, given the unsteady pace of economic re-
“Pessimism among Americans about the upcom- covery, retailers should expect only a small uptick in
ing Christmas season is off the charts,” says Britt holiday sales this year.”
FRONT SECTION.indd 12 08/10/2010 15:56

15. THE BRIEF 13
In addition to the modest two percent increase in News in pictures
spending for 2010, Deloitte’s retail group also expects
total holiday sales to reach $852 billion, representing a
slight improvement over last year’s one percent gain.
But with a change in environment and ever-accelerat-
ing advances in technology, non-store selling and e-
commerce is set to top the retail charts, with Deloitte
highlighting a 15 percent increase in non-store sales,
with nearly two-thirds coming from online channels
and the remainder from catalogs and interactive TV.
“The convenience and functionality that have fu-
elled e-commerce gains in previous seasons will con-
tinue to draw consumers online to do their shopping
this year,” confirms Alison Paul, Vice Chairman and
Deloitte’s retail sector leader in the US. “Online activ-
ity may also influence in-store shopping this holiday
season, as social networks and mobile applications
are playing a more prominent role in the shopping Gap is among the brands that have joined the President’s “Skills for America’s
process. As such, retailers should seek to deliver tightly Future” partnership, which links large companies with community colleges in
integrated and consistent merchandise, inventory and order to boost the job skills of American workers.
promotional messages to customers moving between
web-based and physical storefronts.”
Paul adds that retailers should be out in front of
consumers to get their attention and strike a connec-
tion with their brand early and often. Furthermore,
according to Paul, by reaching out to their consumers
via mobile applications, digital marketing and social
networks, retailers should be able to enhance brand
awareness and build traffic and sales in time for the
Christmas period.
And with US retailers posting their largest sales
gain in five months in August, with strong receipts at
gasoline stations and clothing outlets, the presumption
would be that spending is on the up. Unfortunately it’s
not as clear-cut as that, with retailers and consumers
both explicitly aware of the continuing fragility of their A coffee buyer checks a sample of coffee beans at the coffee growers’ collective in
San Gil, Colombia, on September 24. Colombian coffee growers may fall short of
financial situations. Challenger, Gray & Christmas, re-
a 2010 production forecast after output last year fell to a 33 year low, helping to
leasing its annual holiday hiring forecast, confirmed sustain a 41 percent rally in New York-traded coffee prices this year.
that retailers were more inclined to wait until the last
minute before deciding to take on seasonal help in
November and December. In addition, the company’s
CEO, John Challenger, says that the best opportuni-
ties for seasonal job seekers will be at discount stores,
which he believes will attract a large majority of cost-
conscious consumers during the period.
“There’s still a lot of doubt about the sustainability
of this economy,” asserts Challenger. “Retailers do not
want to be caught with too many workers. There are still
nearly 15 million Americans out of work and many have
lost their homes or are struggling to hang on to them.
This does not bode well for heavy holiday spending.”
But it’s not all doom and gloom for the industry,
as Toys R Us Inc. has brought some festive cheer to
the table by announcing plans to hire 10,000 work-
ers to staff its new 600 Toys R Us Express temporary
The price of gold reached an all time high, with prices over $1300 an ounce as of
stores around the US this coming Christmas. For the
the end of September. Pawn shops and cash converters such as this one are proving
remainder of the industry, it’s another case of ‘watch
popular with consumers looking to make some extra cash.
this space’.
FRONT SECTION.indd 13 08/10/2010 15:30

16. 14 UPFRONT
Retailers look to the environment
Consumers across the globe want companies to
be greener, a recent survey shows.
M
ore than 60 percent of consumers want to buy from environmentally
responsible companies, but the cost of green products continues to be a
hurdle in developed countries, according to a recent international survey.
The fifth annual ImagePower Green Brands Survey, conducted by WPP
agencies Cohn & Wolfe, Landor Associates and Penn Schoen Berland (PSB), as well
as independent strategy consulting firm Esty Environmental Partners, gathered
information on the environmental attitudes of 9000 consumers in
eight countries.
TOP 10 GREEN BRANDS
Selection and labelling emerged as the biggest
challenges in developing economies. The data
also indicate that 70 percent of consumers in
China, India and Brazil plan to spend the same
or more money on green products in the
coming year.
1. BURT’S BEES
Reducing toxic and dangerous
substances emerged as the most
critical activity a company can do to be
green – cited by more than two-thirds of 2. WHOLE FOODS
respondents in each country – followed by
water conservation or recycling. Consumers
also said environmental consciousness is
3. TOM’S OF MAINE
an important corporate priority, ranking
it fourth in importance behind good value,
trustworthiness and being caring about customers.
4. TRADER JOE’S
Good shop, bad shop 5. GOOGLE
T
hink buying green makes you a better
person? Think again. A research study
by Nina Mazar and Chen-Bo Zhong of the 6. AVEENO
University of Toronto suggests that those
who make green purchases are subsequently more
likely to behave in a selfish manner.
Half of the study participants were asked to 7. SC JOHNSON
shop online from a store stocked with mostly
green products, while the other half were given a
store containing conventional products.
Participants were then asked to carry 8. PUBLIX
out one of two tasks. One group was told to
allocate $6 between themselves and another
participant. The green shoppers kept more
for themselves than the others did. 9. MICROSOFT
The other group were given a task
with a clear incentive to lie about the
results to earn more money. The green shoppers earned on average 36¢ more
than they should have, showing that they had lied to boost their income. 10. IKEA
FRONT SECTION.indd 14 08/10/2010 15:30

17. UPFRONT 15
What Do Countries Think About Green Brands?
It would be legitimate to think that with the US coming out of a recession, shoppers would be more pre-occupied with the economic
downturn than saving the planet, and according to the fifth annual ImagePower Green Brands Survey that appears to be the case,
although there is a growing concern for green practices.
Consumers are more concerned about the economy than the environment *
68%
UK 58%
25% 67%
Germany
35% China
57% 32%
79%
France 35%
USA More concerned
17% with the economy
59%
More concerned
India with the environment
72% 37%
51%
Brazil
25%
41% Australia
Very important
60% of consumers say it is of some importance to buy brands from green companies * Somewhat important
Not important
16% 16% 9% 15%
30%
50% 49%
40%
54%
59% 62% 64%
58%
57% 47% 44%
34%
22% 19% 11% 18%
2% 3% 7%
USA UK France Germany Australia China India Brazil
Source: All figures from 2010 ImagePower - Green Brands Survey * Not showing ‘Don’t know’
Graphic created for NG Retail US | www.ngretailus.com | GDS Digital
FRONT SECTION.indd 15 08/10/2010 15:30

18. 16 GLOBAL NEWS
Not everyone shops the same
So what’s happening globally in the wonderful world of retail?
Orchard Road shopping district, Singapore Venus Fort, Japan
NEW HORIZONS GIVE-AND-TAKE
Asian markets in a strong position coming out of the Why swapping is the new shopping in Holland
downturn The large number of flea markets and second-
Some 2.6 million square feet of retail space hand shops dotted around Amsterdam’s city
opened to shoppers in Singapore last year. center have long marked the city out as open to
Between the bustling Orchard Road shopping the idea of thrift retail. But now the concept is
district and several integrated resorts at vari- being taken a step further with the rise in swap-shopping currently
ous popular and luxurious destinations such as Sentosa Island, being imported from the US. Instead of getting rid of their clothes,
the new developments will provide an extra boost to the city- locals are encouraged to exchange them in private and public
nation’s economy. In addition, the integrated resort helped bring events hosted by enterprising third parties.
a rise in tourist numbers in Singapore with over 946,000 visitors “Want a whole new wardrobe for a fraction of the price? Ex-
welcomed into the country in May, signifying a 30 percent rise change your perfectly good items that you never wear for fabu-
year on year. lous fashion finds,” exhorts Amsterdam’s leading swap-shop host
Further north, Malaysia is seeing an estimated 4.4 million Swap and the City. Colleen Geske and Tamara Raab, creators of the
square feet of retail space coming on to the market this year. event, believe that while the idea of a clothing swap is nothing
new, the economic climate means it’s a perfect time to re-examine
INTO AFRICA fashion-shopping habits. “I wanted to create a fun afternoon out
WalMart to enter into the South African market for women in the Amsterdam area, around the theme of fashion,
Retail giant WalMart has put in a bid of $4.2 bil- beauty and charity,” says Geske.
lion for South African wholesaler Massmart. As And as the event spawns a host of copycat meetings, expect
Africa’s biggest economy, South Africa represents the trend to continue throughout 2010.
a crucial market for WalMart’s success on the
continent. In addition, Massmart operates 288 stores over 14 LOCATION, LOCATION, LOCATION
nations across sub-Saharan Africa, as well as managing some of Themed Hong Kong streets offer bargains
the country’s largest retail chains, and the successful acquisition If you want the best deal, shop where the locals
of the firm would represent the largest takeover in more than 10 shop. That’s the lesson from Hong Kong, where
years for the world’s largest retailer. WalMart failed to be the first consumers in Asia’s retail hotbed have swapped
mover into either the South American or the Asian markets, in retail directories and the internet in favor of lo-
both instances being beaten by French rival Carrefour group. It cally clustered retail ‘theme’ streets to help them find the largest
is now hoping to be the first Western super-retailer to establish selection of goods in town. Kimberley Road is home to dozens of
a presence on the African market and is prepared to take on the wedding gown shops; sport shoe shops line Fa Yuen Street; while
risks that such a move brings with it. florists (unsurprisingly) pack the units along Flower Market Road.
FRONT SECTION.indd 16 08/10/2010 15:30

19. UPFRONT 17
Powerful slate tablet PCs offer
enhanced power, performance
and integrated features
M
otion Computing, a global leader in integrated mobile
Flower Market Road, Hong Kong
computing solutions, has enhanced its entire line of
rugged slate tablet PCs with enhanced integrated
Hong Kong has many such theme-driven clusters of small busi- features and powerful performance. Now with the Intel Core i7
nesses that defy the conventional retail wisdom of avoiding direct vPro processors, Motion offers new levels of performance, security
competition. Economists refer to the phenomenon as the ‘cluster- and manageability. The J3500 and F5v Tablet PCs from Motion are
ing effect’, explaining how it acts as a magnet for like-minded significantly impacting point-of-sale computing by providing real-
shoppers. In addition, Lam Pun-lee of the department of business time access to customer information, inventory details and more – in
studies at Polytechnic University believes grouping similar shops the store, in the field or anywhere else it’s needed.
together actually lowers the cost of marketing and creates more
By offering the latest in processor technology, Motion is providing
choice for consumers. “Hong Kong is a small city,” he says. “The
retailers with the ability to equip mobile and in-store workers with
presence of a few shops of similar products can grow into a cluster.
That in turn attracts spending crowds.” all of the performance they need to improve productivity at the
point-of-service, in a highly mobile device designed for users who
CHIC ON THE CHEAP stand and compute. Enhanced remote management capabilities,
Outlet malls gain in popularity as Japan cuts costs increased security and improved multitasking offer the ability to run
As the saying (almost) goes, when in Tokyo, do multiple applications, with the confidence to know that the data, and
what the Tokyans do. There is a new wind blow- the device, are protected.
ing through Japan’s rising retail market: the Motion’s latest Tablet PC, the J3500, now features capacitive
arrival of city-centre outlet malls is upon us. As
dual touch technology, enabling users to take advantage of the
the uncertain economic climate forces people to become more
accuracy of stylus input or the convenience of touch for navigating
budget-conscious, outlet malls have become increasingly popular
in the land of the rising sun. But with such shops traditionally lo- applications. Both the F5v and J3500 offer a host of features that
cated in hard-to-reach, remote suburbs, growth in the sector has, support the mobile worker with a rugged, lightweight design for
to date, been limited. all-day computing. Extra-durable Corning Gorilla glass offers display
However, one shopping center in Tokyo has brought outlet breakage protection, and combined with the available 128GB solid
shopping to the heart of the city. Although it opened in 1999 with state drive, these tablets are built to withstand highly mobile work
around 160 boutiques and restaurants, Venus Fort, a shopping environments.
complex built to resemble medieval Europe, recently renovated Finally, from the available integrated digital camera to the
its entire third floor to accommodate close to 50 outlet shops – a
optional Gobi2000 mobile broadband with GPS, available web
first for Tokyo. As with other outlet malls, items are heavily dis-
camera, hot-swappable battery solutions and barcode scanner,
counted, sometimes between 50-70 percent off the retail price.
And it is not just the affordability that attracts shoppers, but Motion’s tablet PCs significantly improve how data is used at the
choice as well. point of service.
For more information, please visit www.motioncomputing.com.
FRONT SECTION.indd 17 08/10/2010 15:30

20. 18 UPFRONT
B
etween the increasing popularity Amazon
of devices such as smartphones The Amazon app essentially provides users
and tablets among the US con- with the same service as the website, just
sumer market, and retailers optimized for the screen size. Customers
continuing to look for ways to can browse and purchase products from the
expand their operations in order to keep rev- emporium that is the Amazon store, as well
enues up in a downturn, a spurge in retail cell as manage an existing cart of products and
phone applications seemed only logical. But monitor orders.
how many retailers have fully taken advan- Customer rating ½
tage of the new platforms to maximize the
experience of the mobile user? Macy’s
The iShop from Macy’s was undoubtedly well
eBay received by avid fans of the brand, but the
The app from the online auction site not departments store’s app is basic compared to
only allows users to buy items from their those offered by other retailers. Still it does
cellphone, but also lets consumers track the allow users to shop from the Macy’s online
status of their bids, sending automatic up- store wherever they are.
dates should a higher bid come in. Customer ratings
Apple store customer rating
Target
WalMart This app does what you would hope, given its
The superstore’s app, currently available name, boasting the ability to provide its users
across platforms of various sizes, boasts a with “the tools to simplify and streamline
variety of features, from facilitating such your shopping experience.” Beyond the basic
simple tasks as searching for products or functions, this app allows users to set their
nearby store locations, to more specific func- store preference in order to see results spe-
tions such as determining the correct TV size cific to their local outlet, has a barcode scan-
for your room. ning function and helps users search for gifts
Customer rating by age, gender or even personality.
Customer rating ½
FRONT SECTION.indd 18 11/10/2010 11:58

21. SAP_AD.indd 1 1/6/10 11:18:50

22. 20 UPFRONT
I
t has been a hot topic among retail
industry professionals for a while
now. And indeed, the escalating
use of social media among cash rich
consumers has been so extreme over
the last five years that retailers would
be foolish not to jump on board. But the
latest social media trend has had retailers
at the forefront of the movement. Location-
based social media has proved increasingly
popular in recent months, with networks
such as Gowalla or Loopt and the recent
addition of Facebook’s Places application,
but most notably with the conception of
Foursquare.
Some cite it more as a game than a form
of virtual socializing, only incorporating
a limited amount of a user’s information
into the network. However for retailers,
it is proving one of the most successful
platforms for social media marketing to
have emerged out of the recent boom in
social technology.
Location-based networks provide an
experience more closely aligned with reality;
while sounding like a cheesy marketing line
On location
this statement does highlight the primary
appeal for retailers in that it deliberately
targets consumers when they are out and
provides the potential to draw customers
physically into a store. With Foursquare
now reporting more than three million
users round the world, and an estimated
Location-based social media is the latest craze for the web-
600,000 more singing up each month, this enabled generation. But how can it benefit today’s retailer?
is the fastest growing social medium; and
the increasing developments in smartphone
technology look set to boost those numbers CardStart win a pair of tickets to the Marc Jacobs show
further. Taking their cue from the Starbucks at Fashion Week.
So which retailers have been riding initiative, the digital customer loyalty
the wave of the location-based social program teamed up with Foursquare Ann Taylor
media movement? And more importantly, to improve customer/retailer relations. The women’s fashion retailer launched a
how have they used Foursquare to boost CardStart is a digital facility that manages discount incentive for Foursquare users at
revenues? a consumer’s club or loyalty cards, with an the end of the summer, offering visitors to
iPhone application so users can scan while any of its eight new stores across New York
Starbucks at a checkout. Now users can check in on City 15 percent off a purchase on their fifth
The global coffee shop chain has often been Foursquare automatically while using their ‘check-in’. ‘Mayors’ can expect to receive 25
cited as a highly engaging brand thanks CardStart for iPhone application. While not percent off their purchases.
to its social media presence, and has been offering consumer rewards just yet, this
involved in the Foursquare movement a move is another indicator of the integration Tasti D-Lite
while, after developing the ‘Barista badge’ of location-based social media and loyalty This program encourages Tasti customers
back in March. Then back in May, Starbucks schemes. to sync their loyalty cards with their
introduced its temporary Mayor Offer, Foursquare accounts. After registering
rewarding frequent visitors of a particular Marc Jacobs the Tasti D-Lite TreatCard online, users
store with discount vouchers. The offer was The designer teamed up with Foursquare can enable his or her Foursquare account,
only available for a limited time, however during New York Fashion Week back in allowing for automatic ‘check-in’ when
Starbucks was confident that this was only February to draw consumers into Marc Jacobs the card is used at the counter as well as
the beginning for location-based loyalty stores. Consumers could ‘check-in’ at any receiving loyalty points that can later be
schemes. store around the country for the chance to redeemed as goods.
FRONT SECTION.indd 20 08/10/2010 15:30

23. Lithuim AD.indd 1 08/07/2010 13:15

24. 22 UPFRONT
Reality bytes
I
magine a world in which small, cartoon-
style tags pop up within your field of
vision, overlaying real-world objects and
buildings to describe what you’re looking
at, like Arnie in Terminator 2. It might sound
like something straight out of Hollywood,
but that is essentially what Japan’s two larg-
est cellphone operators are about to offer
their millions of customers, using the cam-
eras and screens of smartphones – along with
vast online databases – to supplement your
worldview with everything from product re-
views to directions to price comparison data.
It’s called ‘augmented reality’, and it’s the
next hot feature to hit smartphones in 2010.
Japan’s NTT DoCoMo launched ‘chokkan nabi’
(or intuitive navigation) in September to help
people find their way around megacities
such as Tokyo and Osaka and other places
in Japan. “You just need to focus on a street,
a building or a particular spot with your
camera-equipped cellphone to see if there is visual landmarks and then displays live and called Point & Find, which involves pointing
a bank, a restaurant, a supermarket or other past tweets from others as ‘air tags’ in the your camera phone at real-world objects to
location,” a DoCoMo official told AFP. “Labels same location. access information and functions. The service
or signs indicate, for example, the distance to Internationally, several operators are har- also allows users to scan barcodes to compare
a chosen restaurant, schedules, menus, etc. nessing similar technology. Finnish cellphone prices, read reviews or save a product to a
With a simple gesture, you can switch back to giant Nokia is offering a free application wish list.
a conventional map in two dimensions.”
The service has so far registered some
600,000 points of interest throughout Japan,
including restaurants, shops and train sta-
AR SHOPPING APPS
tions, which can be searched through user-
defined criteria. The technology, developed An array of programs that will remake everything from roaming the mall
with mapmaker Zenrin, uses GPS and sophis- to impulse buying.
ticated software to place virtual tags on real-
world objects and provide directions to places
outside the user’s direct view. It also links with
micro-blogging site Twitter, which has been
wildly successful in Japan, so that its users can
spot each other in real time and real space, and
tweet comments about where they are.
Meanwhile, Japan’s number two mobile
operator KDDI has developed a platform
that allows users to scan, for example, a CD
advertising poster with their camera phone
to gain additional material, such as an extract
Finders, keepers Virtual dressing room
The most obvious application of augmented Meanwhile for the home shopper, Zugara’s
from a song. The service will then offer the
reality is location-based services that can tell Webcam Social Shopper uses motion-
user the option to buy a download of the
if a shop you need is close by. Zagat was first capture technology to create a virtual
song with just two clicks, or can guide them
to market with NRU, but competitors such dressing room. Your movements allow you to
to the nearest real-world CD shop. The appli-
as Yelp have released their own AR apps as navigate among selections, and the software
cation, which also features virtual characters,
well. In addition to ratings and wayfinding, calculates your orientation so that you can
is an advanced version of an already popular
apps could also include shopping guides. adjust the garment to your body.
Japanese application for Apple’s iPhone
called Sekai Camera. That program identifies
FRONT SECTION.indd 22 08/10/2010 15:30

25. CEO PERSPECTIVE 23
Looking ahead
It’s a marketer’s dream – and a philanderer’s nightmare: glasses that track your eyes’ every movement.
T
he ability to see exactly what the customer sees, what an advertisement. Comfortable and lightweight, the glasses have no
displays, ads or items catch their eye and what they skip over distracting cameras or mirrors in the field of view nor do they require
without a second glance has long been the Holy Grail for the user to carry bulky equipment. As a result, the user behaves more
marketing departments everywhere. And now the vision is naturally giving the data a much higher level of validity.
set to become reality thanks to pioneering technology from Tobii, the You might not win any prizes for style – unless you’re attending
global market leader in eye tracking and eye control. an 80s revival – but the potential applications for retail are huge.
According to the firm, Tobii Glasses will help researchers in “Never before has it been possible to cost-effectively conduct
commercial, scientific and government organizations gain greater quantitative studies in real world environments and automatically
levels of insight into the preferences, reactions and personal see the visual attention a product or display received,” says Gill
experiences of people in a natural environment. Sounds a bit sci-fi, Aitchison, Global President of Ipsos Shopper and Retail Research, who
right? had access to the glasses at a recent demonstration. Now researchers
“We believe the product opens up entirely new possibilities can measure actual consumer responses during real shopping trips
for our customers to conduct research in a way that previously has – and this can be achieved at the point of purchase where decisions
not been possible,” agrees Tom Englund, Executive Vice President are made, instead of in unnatural laboratory environments, online
of Analysis Solutions at Tobii Technology AB. “The application of questionnaires or over the phone.
this product to provide insight into human behavior can include And the best thing about the technology? It’s available now.
anything from understanding buyer preferences, learning about Expect marketers, retailers and jealous spouses everywhere to be
gaze in operating mobile devices, playing sports, driving or operating queuing round the block.
machinery. In fact, the number of ways you can apply this technology
to conduct research is virtually endless.”
The new Tobii Glasses look and feel like a regular pair of
glasses and allow wearers to walk around freely, making it easy for “The product opens
researchers to create a real-world environment in which to capture up entirely new
user behavior. This can be while they are browsing in shopping possibilities
environments, using a computer, trying out new products or reading
for customers to
conduct research
in a way that
previously has
not been possible”
Seeing is believing
Augmented reality isn’t just limited to
smartphones. The coolest in-store information
kiosk out there comes from Lego: the toy
company is test launching a digital box that,
when held up to an in-store camera, will
superimpose a rendering of the completed Lego
model on top of the product box onscreen.
FRONT SECTION.indd 23 08/10/2010 15:30

26. 24 UPFRONT
Big box solutions
IKEA’s journey from Sweden’s best-kept secret to global retail sensation has been founded on slavish
devotion to a carefully formulated business plan. Here, CIO Paolo Cinelli explains why he is looking
Y
to apply similar discipline to the firm’s technology function. By Ben Thompson
ou can spot the stores from a mile away: huge, hulking ware- give us everyday, and we see this as a missed opportunity. We’re not
houses painted in distinctive blue and yellow, dominating good enough at understanding and capturing feedback in a structured
the skyline as their parent company does the home furnish- way so that we can listen to it, interpret it and react more appropriately.
ings retail landscape. In a little over half-a-century, IKEA has Take the IKEA family card, as an example. This card is owned by over 30
expanded beyond the boundaries of its native Sweden to become one million people now, and is a potential goldmine of information. But we
of the most successful multinational retailers of the modern age, with don’t take advantage of it because of missing links between systems.”
global sales of $30 billion last year. It’s a disconnect Cinelli is keen to bridge. After all, IKEA plans its
The numbers alone are staggering. Its stores welcomed a total of stores meticulously to ensure customers are best able to help them-
590 million shoppers in 2009, its website attracted 561 million visitors, selves. Each one carries products from a centrally developed range and
while its cult catalogue was printed in 27 languages and 56 editions to is carefully designed to have the same look and feel so that the custom-
produce a whopping 198 million copies. The IKEA range consists of 9500 er experience is as consistent as possible – whether you’re in Malmo,
home furnishing products; the company employs 123,000 co-workers in Minneapolis or Moscow. But surprisingly for a firm that has put consis-
39 countries; suppliers number 1220 in 55 countries. And as of August tency and standardization at the heart of its business model, the same
last year, the firm operated 267 stores with a further 34 owned and run rigor has not always been applied to the evolution of its IT architecture.
by franchisees outside the IKEA Group. “That consistency in store layout is the result of orderly planning; of
But just as impressive as the financial course we have several blueprints we work
figures has been the way the company has “The unwritten deal from, but there are a limited number of ver-
stamped itself indelibly into the public con- sions and everybody sticks to them,” explains
sciousness. IKEA has become a byword for with our customers is Cinelli. “But in contrast, the IT landscape is
affordable style and, more importantly, a largely unplanned. It just evolved over the
lifestyle choice for an ever-expanding army
that ‘you do your part, years to become what it is today. What would
of fans who love its clean lines and simple el- we do ours’. That’s happen if our stores suffered from the lack
egance. It has also become a common popular of planning that the IT systems suffer from?
culture touchstone, referenced in everything in the DNA of the Imagine what they would look like? Badly
from The Simpsons to Hollywood movies
such as Fight Club. And while some see it as
relationship” planned, disorganized, inconsistent – if, as
a customer, you were ever able to get out of
representing the very height of mass-market that store in the first place, you would never
populism and the enemy of individual style, they are far outnumbered come back again.”
by those who just want their home to look good and not pay too much In response, Cinelli and his leadership team have drawn up a blue-
for the privilege. One way or another, people are passionate about IKEA. print for IT transformation they are calling IT4Business that he hopes will
And for its own part, the company is just as passionate about its provide a reference architecture that can drive decisions going forward.
customers. “We have a huge attachment to our customers,” says Group “Part of IT4Business is to change our architecture in the direction of
CIO Paolo Cinelli. “We really value them and it’s a really deep principle fewer, more integrated systems,” he says. “It’s not a technology priority
of the company overall. For us, it’s about fulfilling a contract: the un- per se, it is more of an organizational change in terms of IT governance.
written deal with our customers is that ‘you do your part, we do ours’. It’s about bringing the same level of standardization and consistency to
That’s in the DNA of the relationship.” Indeed, while the firm’s legendary the IT architectures that we bring to the rest of the organization. It won’t
hands-off policy to in-store service may seem like an abdication of con- happen overnight, but what’s important is recognition of the fact that
sumer responsibility, scratch beneath the surface and it actually reveals customers now expect there will be no difference between channels of
a remarkably grown-up approach to its customers – a “we’re here if you information.”
need us but won’t constantly pressure you into buying” style of retail. Of course, IKEA is not alone in facing the challenge of how to deal
Customers find it empowering, and it frees IKEA staff up to concentrate with the sprawl of legacy applications while effectively planning for the
on the store visitors that genuinely require help. future; it’s a common problem given the pace at which the technology
And IT is key to providing that help. “Whatever you want to do, landscape has evolved over the past few decades. The difference is that
whether it’s generating new business or opening a new channel or even IKEA is committed to changing the status quo to better reflect the needs
driving quality improvements, you need IT investment,” says Cinelli. “So of the 21st century and enable it to serve its customers more efficiently
if we increase the probability of success of projects with an IT compo- and effectively. In an environment where the customer is increasingly
nent, we actually increase the probability of success of projects in gener- king – and one where the right strategic uses of technology will become
al. For instance, customer relationship management is a really big focus a key competitive advantage – that could mean the difference between
area for us; we don’t currently make the most of the feedback customers success and failure.
FRONT SECTION.indd 24 08/10/2010 15:30

27. UPFRONT 25
??????
FRONT SECTION.indd 25 08/10/2010 15:30

28. 26 UPFRONT
Holiday plans
B Vending Vikings
est Buy Co. Inc., the Richfield-based con-
sumer electronics retailer, will hire 29,000
seasonal employees for the holiday shopping
season this year. CEO Brian Dunn made the The Minnesota Vikings and Indianapolis-based merchandise company MainGate
announcement in a webcast preview of the Christmas Inc have launched the first NFL-branded vending machine in Mall of America.
buying season. “With vending machines becoming more and more commonplace, we
According to Dunn, smartphones, touchscreen thought we would test the concept with our fans via a location at Mall of
tablet computers, new video gaming platforms (includ- America,” said Vikings Vice President of Sales and Marketing/Chief Marketing
ing 3D games) and e-readers will drive sales this year. Officer Steve LaCroix. If the machine proves successful, the companies will con-
He said the company is currently in talks with smart sider installing more in the Twin Cities area.
phone maker Research in Motion to carry its touch- “Consumers are getting very comfortable with self service from a retail
screen tablet computer. perspective,” said David Moroknek, President and CEO of MainGate Inc. “We be-
He also said Best Buy would open between 44 and lieve that this is a viable method of selling licensed products, and an economical
50 new Mobile Stores before Thanksgiving, and expand way to increase the number of outlets we have to service the core fans. Growing
the company’s used game business to 1000 stores from merchandise sales and building the Vikings brand are our goals and we feel this
its current presence in 600 stores. program allows us to do both.”
Juice row
A
tlanta-based soft-drink giant Coca-Cola Co.
has launched a lawsuit against Aldi Inc., the
German discount grocery store chain. The suit
alleges that the packaging of Aldi’s ‘Nature’s
Nectar’ line of juices infringes on Coke’s patents for its
‘Simply’ family of juices.
Coca-Cola filed the suit on September 24 in the US
District Court in Atlanta, seeking punitive damages, prof-
its Aldi gained from the alleged infringement, attorney’s
fees and other damages. Coke is pushing for a jury trial.
NJ-based food maker Johanna Foods Inc. is also
named in the suit. The company sells ‘Nature’s Nectar’ to
Aldi along with a product line called ‘Tree Ripe’ that uses
similar packaging.
Aldi has more than 1100 US stores located in 31 states,
and has plans to open 100 new stores across the country
in 2010.
FRONT SECTION.indd 26 08/10/2010 15:30

29. UPFRONT 27
Logo wars
R
etail stalwart Gap recently
revealed its new logo – to a bar-
rage of criticism and negative
response from fans. The new
logo, which uses the typeface
more often associated with
American Apparel, and a basic small square
of color, has encouraged a tremendous back-
Bigger is better
T
lash on Twitter and other social mediums.
Designers and fans of the brand alike have
claimed that the logo is cheap
and unsophisticated, and sug- he Bon-Ton Stores, Inc. has an-
gest that the move is symp- nounced the signing of an agree-
tomatic of a “serious branding ment with Casual Male Retail
crisis” for the company. Group, Inc. to provide men’s
In response a number of big and tall apparel to Bon-Ton
designers have created their customers through Bon-Ton’s
own version of the logo, which in turn has e-commerce website and, beginning in the
sparked cynical rumours that Gap’s logo was spring of 2011, certain Bon-Ton stores. The
only ever a move by the company to crowd product offerings will include sportswear,
source a new design, cutting the costs and activewear, clothing and accessories.
headaches involved with re-branding. Casual Male Retail Group, based in
Canton, Mass., is the largest specialty retailer
of big and tall men’s
Company Index Q4 2010 “Casual Male
Retail Group,
apparel, with op-
erations throughout
the United States,
Inc. to provide
Companies in this issue are indexed to the first page of the men’s big and tall Canada and Europe.
article in which each is mentioned. apparel to Bon- Bud Bergren,
Ton customers President and Chief
Amazon 34, 60 Macy’s 74 through Bon-Ton’s Executive Officer of
eCommerce Bon-Ton, said the
America’s Research Group 12 Microsoft 76
website”
Anthropologie 60 Motion Computing 6, 17 company is “very
Apple Stores 44 National Retail Federation 12, 54, 60 excited about our
Best Buy 60 Neiman-Marcus 44 strategic alliance with Casual Male”, and is
Best Buy 74 Netflix 101 planning to take advantage of the company’s
BIGresearch 12 Nielsen 60 dominant position in big and tall clothing to
Blockbuster 60, 101 Office Depot 28 allow Bon-Ton to offer its customers hard-to-
Challenger, Gray & Christmas 12 Ovum 60 find sizes in a wide variety of basic casual wear
Deloitte 12, 60 Philips Teletrol IFC, 92, 94 and sportswear.
Discovery-Based Retail 44 Redbox 101
eBay 34, 60 RSA 70
EnQii 48, 51 Saks Fifth Avenue 34
Environmental Protection 96 SMG 44
Agency Starbucks 90
Facebook 72 Steve Madden 72
Footlocker 60 Tesco 96
Forrester Research 60 The Right Thing 88, 89, IBC
Free People 60 Twitter 76
Godiva 86 Urban Outfitters 60
Harris Corp 4, 48, 53 Verdict Research 60
IBM 74, 96 Virgin 76
Intel 2,46, 48 Walgreens 68
Kohl’s Department Stores 96 Walmart 96
Liz Claiborne 106 Zappos 34, 76
FRONT SECTION.indd 27 08/10/2010 15:30

30. 28 THE BIG INTERVIEW
Survivalof
Big Interview Steve Odland.indd 28 08/10/2010 15:48

31. THE BIG INTERVIEW 29
At one point, the economic crisis
of the last two years pushed Office
Depot stock down to penny-stock
levels and while 2010 has seen
the company rally, a full recovery
is far from assured. CEO Steve
Odland explains how the company
weathered the downturn, and looks
ahead to a brighter future.
ffice Depot’s Steve Odland has endured a
tough two years. The financial crisis and
subsequent global recession has not been
kind to the firm or its CEO: key markets
such as Florida and California got ham-
mered in the downturn, it lost customers
to rival Staples and it was further embarrassed by a series
of accounting scandals. Since trading at $38 in early 2007,
shares have fallen 89 percent to penny-stock levels.
But under Odland’s leadership, the office supplier is
staging something of a recovery, continuing a multi-year
turnaround strategy that began before the economic mael-
strom hit. In 2009 it cut $680 million of operating expenses,
mostly by closing 120 stores. It reduced distribution centers
from 33 to 12. And now it’s meeting with vendors to review
every product it sells. Indeed, just last month Office Depot
posted a better-than-expected quarterly loss (driven by cost
cuts and profits in its North American stores), while analysts
believe remodeled stores and a solid balance sheet put the
office supplies retailer in a good position to benefit from an
eventual economic recovery when it arrves.
So how do you instill confidence in your staff when
times are tough? How do you motivate them and keep
them believing in the brand? In short, how do you survive
a global recession? “Leadership requires followership, and
so it requires that you invest time in the people around you
and that you make sure that you’re listening and working
as a team,” says Odland. Next Generation Retail’s Jonathan
Spragg caught up with him to find out more.
Big Interview Steve Odland.indd 29 08/10/2010 15:48

32. 30 THE BIG INTERVIEW
The economy has been tough over the last 18 months, nimble in the services that we offer. And we have to take care
with an obvious impact on both the workforce and cus- of business. That’s our slogan, of course, but it really means
tomers as well. What have been the biggest challenges being able to adapt to the needs of these small and medium
for Office Depot during that time? sized businesses.
Steve Odland. Office Depot provides office products, and so
when employment goes down, office product purchases go At one point during the economic crisis, the share price
down as a result. We also sell to a lot of small and medium dropped to just 60 cents. How difficult is it to lead within
sized businesses that have been disproportionately hurt that environment and instill confidence in employees
during this period of time, so we have been working very that things will get better?
carefully with our small and medium size business custom- SO. Well, it was an extremely challenging period for every-
ers to make sure our offering reflects their needs – we’re body, and we just determined that we were going to com-
changing pack sizes so that they’re smaller, and we’re work- municate, communicate, communicate with our people and
ing on private brand products that are lower priced. We’ve make sure that we shared everything that was going on. At
approached this period with the idea of ‘value’ uppermost in one point we were having weekly open forums, all-employee
our minds; with the idea that we want to take care of these meetings where we would bring people in and we were ex-
customers, and that if we do, they will remember us during plaining to them everything we knew about the economy,
this period and when they can afford to buy more they will. what was going on in Washington and other world capitals,
And I think that’s been a very successful strategy. what was happening with the legislative actions in various
countries, and then what we were doing to take care of it.
How important is it for you to be flexible and able to And equally as important, we told them what we didn’t
adapt to the changing environment? know – that we didn’t know what the future was going to
SO. In order to succeed now, every company has to be able hold, that we didn’t know when it was going end, but that we
to adapt because the environment changes so rapidly. The were being proactive about getting through it. So we talked
economy was terrific through the first part of the decade, to them about cash flow, we talked to them about control-
and we were rapidly expanding in terms of sales – we could ling what we could control in terms of how we interact with
hardly keep up with the sales growth all the way through the our customers, and we said, “If we do all of this, we will get
first half of 2007. But then came the dramatic changes in the through this just fine – and then when the economy recov-
economy that affected our small business customers. So we ers, we will recover with it”. And I think it was a very suc-
have to be nimble in the products that we offer. We have to be cessful strategy.
Big Interview Steve Odland.indd 30 08/10/2010 15:48