penumbra media & design

Communicating Corporate Culture

Showrooming

Matthew Hudson | June 22, 2012

How can retailers protect themselves from “showrooming?”

This is the question of the day – or at least it should be. Showrooming is the practice of Customers bringing their mobile device into your store, scanning the UPCs or model number info on your merchandise and then looking online for the best price. In other words, your store becomes a “showroom” for the website without a physical space where Customers can try before they buy and feel it before they deal it. There are several apps for this – most free – which turn any mobile device with a camera into a scanner and a modern day “price checker.”  

I know what you are thinking. Isn’t it enough that your competition has huge national ad buys and you have to see them on TV and drive by their billboards? Now the Customer is bringing your competition into the store with them on their mobile device! (By the way, we use the term mobile device because if you think it’s just about smartphones, then you are not paying attention to the tablet trend.)

I have heard about retailers planning to put in machines or devices to break up the ability to showroom, but this will also break up the ability to text your wife or husband to find out where they are in the store. So, not a real solution and certainly not Customer friendly.

Let’s face it. Shopping with our mobile devices is not a fad and it is not going away.  Research firm Gartner predicts that worldwide mobile payment transactions will surpass $171.5 billion this year, up from $106 billion last year. Apps like Square or Google Wallet are even encouraging people to use their mobile device for shopping. And with iOS launching Passbook and Microsoft Windows 8 having a “wallet” built in this Fall, it will give retailers the ability to store gift cards, make payments and more on the Customer’s mobile device. And don’t get me started on Near-field technology! The bottom line – we are feeding this trend, whether we realize it or not.

The best defense we have against “showrooming,” is our people. And here is where many retailers are going to get burned by this trend. In the last few years, we have seen a decline in the importance of professional sales assistance and an increase in self-service and sales “clerks” who can take your money, but not answer your questions. So, what is a Customer left to do? They need answers, don’t’ they? They turn to their mobile device. Simply put, stores who deemphasize professional sales assistance are pushing the Customer in this direction.

The truth is that “showrooming” gets its fuel from self-service or low service environments. If you are greeted by someone when you enter a store, are asked thought-provoking, open-ended questions about your wants, interests, needs, concerns and desires and then given a demonstration or allowed to try on or use the merchandise then your “need” to showroom diminishes. This is not to say that people do not care about price. But it has been proven time and time again, that price is not the main driver in a buying decision. It’s not if we give the Customer a reason to make it not, that is.

Invest in your people. Your professional sales team’s ability to deliver remarkable service and “tether” the Customer to your business is the key to defeating “showrooming.” It’s hard to showroom, when you have a professional salesperson with you – it’s awkward and it just feels wrong. Now, read this carefully, I did not say have someone stand with them and watch them. I said have a sales professional work a structured sales process (like the G.R.E.A.T. system from the Retail Sales Bible) with the Customer.

Remember this, Customers are NOT “showrooming” simply because they want a better price, they are doing it because in their minds, this is the answer to lack of service in your store.

Another way to combat this behavior is to create “wow” moments in the store when it comes to pricing. If you think about it, your merchandising is the other “salesman” in your store. A great source for this is “closeouts” from your vendors. Find items that you can buy at really low prices and then lace them throughout your mix as special buys. A customer who comes across these items with big price discounts on items that they probably cannot find on their mobile device, will see value in your store. The key is to blend these into your mix and not let these “deals” overpower your brand. You are a full price retailer not an outlet and the more of these deals you have the closer to the outlet “line” you are placing yourself.

When we had our shoe stores, we took this idea one step further. The “wow” deals were only available to our loyal customers. In other words, if you were a member of our loyalty club, you got the special price, if not you paid regular price. Of course, our club was free and anyone could join, but the perception that it gave was that you must be part of the store’s club – again, cannot “showroom” these items because they are deals for members and not your regular price. And they are deals you could only get in our stores. We sold online as well, but you could notget your club deals online.

Lastly, use your vendor as your partner and ally against showrooming. Work with them to give you merchandise that is not available online. It is in both of your interests. Sell the fact to your Customers that you hand pick the merchandise for them. That online, they will see thousands upon thousands of choices and more noise and confusion than it is worth. You have taken all that away with your store and done the editing for them. In many cases, shopping online can take longer.

Showrooming is real and it is trending. But it can be defeated. 1. Have solid, well-trained sales professionals. 2. Build in “wow” moments that show there is no need to go online. 3. Work with your vendors to gain exclusives that cannot be competed with online. 4. Deliver remarkable service every time. Even if you are not the cheapest price, people will still pay for service. And their “need” for “showrooming” goes away.

Category: 3rd Degree Shower Burn, Corporate Culture | Comments Off
Tags:

Knock-off Branding

Matthew Hudson | May 17, 2012

Let me say at the outset, that I am a fan of the underdog. Microsoft is the underdog in the consumer world. I first wrote about them when I visited their very first store in AZ. That post and its observations was one of the highest read posts in this blog. It just goes to show you that Microsoft is still a big and powerful brand name. 

Last week, I was in Austin and go the chance to be at the grand opening of the Microsoft store in the Domain. At first glance, there was a line of people waiting to get inside - good sign. This means there is some excitement about the store. At second glance, I realized that the vast majority of people in the line had Dell employee badges hanging from their belts. (so in case you had some delays calling in that day, they were all at the Microsoft retail store) 
As you stroll through the store you can see some of the “upgrades” from the original. And I would say that the store is looking much more appealing. However, look at the picture of the outside of the store
Seem familiar? Glass, sleek, one-color front with an emblem versus a name. Tables inside with light colored woods. Getting the picture? There is a store in Dallas, TX that sells purses. They look like Gucci, Prada, Coach, etc, but they are not. When you go to the counter to pay, they will get a brand name plate out from under the router and stick it onto the bag and wallah - you now have a Kate Spade purse for $20. 
I cannot shake the feeling of the Microsoft store as being exactly the same as the handbag. Why would they put so much effort into being a “knock-off” of Apple versus being their own brand with their own identity with their own personality? Do they honestly believe people will wonder into their store thinking its Apple? 
The problem is that instead of this store looking like a beaming representation of the brand, it looks like an imitation of something they would like to be. Again, I want Microsoft to succeed. But, they just seem to place more value in being Apple than they do in being themselves. And what are we customers left to think about them? you can get stuff that looks like Apple, but not quite as real? I know that cannot be what they were thinking. 
Remember, Everything Speaks. And this store design is screaming - we wish we were Apple. 
And the irony is that as soon as the Microsoft retail store opened, the Apple store - a few doors down the row - closed for remodeling. Wonder what they have in store? 

Category: 3rd Degree Shower Burn, Corporate Culture | Comments Off
Tags:

“Modeling” in Retail

Matthew Hudson | May 1, 2012

No matter how terrific your sales process is, the ability to execute on that process is the key to your success. And your ability to teach and coach your sales professionals is paramount. You cannot rely on “training” to get the job done. Too many managers operate off of the principle that “they went through the training, so they know what to do.” 
Right away, there is a big problem with this. First, studies show that we forget about 1/2 of what we have been told in training within the first hour? And after a week, that drops to about 25% of what was in the training class. For most of you, you probably have no problem accepting those stats as true from your own personal experiences. But the fact of the matter is that without your follow-up as a sales coach, your chances of success are also dropping by these %’s each week.
Its not that your sales processionals are lazy or don’t care - its that they are adults. And the statistics in the last paragraph apply to all adults. But you can make a difference in your sales professionals’ success by making a difference in their behaviors.
One of the biggest mistakes we see Managers make is this - when they are on the sales floor, they do not follow the sales process they train their people on! (Actually, the number one issue is probably that the managers don’t even get on the sales floor or take an up anymore, but that is for another post.) The manager cuts corners, makes it up as he goes along and the sales professionals are watching every moment of this. And they are cataloguing it in their mind for the time when you comment on their sales performance.
Modeling the way is one of the key forms of leadership touted by all the great leadership gurus from Robert Greenleaf, to Jim Collins to Warren Bennis to Mary Kay to Jack Welch. All of these leaders have stated that their ability to “model” the right behavior for their employees was key to their leadership style.
“Ah, but I closed the sale,” you say. So? If you believe this, you are basically saying that the only thing that matters is closing the sale. This is a very slippery slope that leads to many, many bad outcomes - not the least of which is for this type of “win at all costs” behavior to be woven into the fabric of your store or company’s culture.
You set the tone. You model the way. Your employees are watching your every move. If you want them to follow your lead or do what you say, then you have to realize that Everything Speaks. And nothing speaks louder than your behaviors on the sales floor - especially in retail.
This means that your must follow the sales process at all times. It means that you must spend more time on the sales floor than you do currently. Yes you. We know its tough, especially for the small business owners. But we have been there. We have run our own stores and have had to fight the balance between managing the business and managing the people. But the bottom line is that sales professionals are not born - they are “modeled.” Which means that they are developed through having a structured sales process, taught through professional training, and coached by a “present” owner or manager on a weekly (daily) basis.
What gets rewarded gets repeated. When you are on the sales floor, you can reward their good behaviors. When you are not on the sales floor? Well, you are also rewarding them. As Ferdinand Fournies always said, “your non-action means as much as your action.” Translation - if you let them do it however they want by not being present on a regular basis, then you are rewarding their behavior (albeit not intentionally.)
Modeling the way is one part of an overall strategy for coaching your sales professionals to their highest potential. But is the one way that can do the most good or the most harm to your team depending on what you are modeling. Makes you think twice about “closing the sale” any way you can. We all know that any process, any technique will work at least once - but what you need is a process and a technique that will work over and over and over. A retail sales process like the G.R.E.A.T. system of the Retail Sales Bible. Check it out.

Category: 3rd Degree Shower Burn, Corporate Culture | Comments Off
Tags:

Fair and Square

Matthew Hudson | April 20, 2012

Okay, let me start by saying I believe this idea is never going to work. It violates the very principles that this blog preaches about in regards to corporate culture. First what is the new Fair and Square marketing plan from J.C. Penney?

J.C. Penney’s new “fair and square” plan cuts prices by 40 percent from what they were a year ago. The idea was to get off the promotional treadmill, away from the steady stream of specials, coupons and “doorbusters” that drain retailers’ profits. But they are still running sales. This undermines that strategy since sales aren’t really going away. Each month, they select some items to discount further, and on the first and third Friday of each month, they hold “clearance” sales with even lower prices.

So do you see the issue here? The culture. If you want to transform the culture of your business to be one of fair and square pricing where there is no need for a sale, the first people you have to convince are the employees. And if you continue to run sales, then what are you reinforcing with your employees? Simply put - that fair and square is a marketing and advertising plan and not a real change in the corporate culture’s values. They will buy in at first. There will be big meetings and fun internal marketing programs to “get the word out.” But each time they run a sale, an employee knows that these prices are just different. Plus, they know that you cannot reduce your prices by 40% without changing the products. So they are left asking is this a better deal or cheaper goods?

Don’t get me wrong, it will work for awhile. But the Culture Cycle (the cycle of how a corporate culture develops and sustains) will kick in and the new ideas brought forth with this concept will be swept away by the reality of the culture. The employee and the customer will not believe it.

Apple, where Ron Johnson now CEO of J.C. Penney came from knew this very well. And they performed it very well. They were models for how to align the employees with the culture. But, that was a “ground up.” Process, In fact, Apple closed the first few stores they opened and started over again because the stores did not align with the corporate culture values.

Our friends who work at JCP have all shared that they are “confused” by fair and square and do not understand who it aligns with who JCP is and worse yet, do not know where JCP is going. JCP is an established company with an established culture that needs to be changed. The simple fact is that it is 100 times harder to change a culture than it is to start one.

There is a long road ahead of JCP. And, we hope that Wall Street gives them time to work it out. But learn the lesson here. You must program the future to accept this new value as a company. Otherwise, the culture will strip away every part of your plan.

Category: 3rd Degree Shower Burn, Corporate Culture | Comments Off
Tags:

Groundhog Day

Matthew Hudson | March 10, 2012

Another title of this blog could be a line from the old Talking Heads song, same as it ever was. (gotta love David Byrne) Anyway, I had a meeting last week with a group of executives and we discussed a topic that was exciting to them and repeat for me.

You see, this group of execs was different from the last ones, but it was the same company. They were telling me how they were headed down this new path - but by new, they actually meant old. I shared with them my experiences from before and how the idea had failed. And then came the magic words, ‘oh, but this time it will be different!’

Ah, yes, this time it will be different. We hear this line in organizations of all sizes, shapes and types. Whether for profit or non-profit, we have talked many times before on how the principles of corporate culture are the same.

So, why tell this story. Simple. Becasue when someone says to us “this time ti will be different” what we look for is the change in their culture that supports that statement. 99% of the time, it is not a corporate culture chnage, but actualy a personel change. A new person is brought in to lead and they want to try an idea that was attempted before. Sometimes they do not even know that it had been attempted and failed. Often times, thought, they do, but they beleive in the magical, mystical words “this time it will be different.’

When what caused the idea to die a slow death before was the culture, no one person or even one team of persons can make it work the second time around. While logically it might make sense that having more people in the boat rowing with you will make a difference, you have to understand that you are rowing upstream in the rapids of corporate culture. (insert image from all those river wild movies scenes you have seen)

I remember sitting at lunch with Milton Moskowitz at the “100 Best Companies to Work For” symposium. I had commented on the fact that I was impressed with all the new initiatives being presented by the various winners of the disctinction who were asked to speak. Milton said, “my prediction is that 90% of these initiatives will never work. The company’s culture will never except it.” (He knew I was a coportae culture guy, so he was speaking right to me.) The example he gave was paterntity leave, which was the hot new idea being presented. He said, “most companies who add this benefit see no results. The culture of the company is such that a man would be afraid to take advantage of this benefit for fear of the repercussions.”

Exactly. If the culture of the company will not except it, then it will not work. So, next time you hear those magic words, first ask the team, “what is different about our culture this time that will allow this to work?” After everyone looks at you bizarrly for this question, you can feel assured in the fact that you are actually saving the team a bunch of heartache and avoid them being cast in the sequel of Groundhog Day.

Category: 3rd Degree Shower Burn, Corporate Culture | Comments Off
Tags:

Next Page »