FOMO & the Retail Experience

iStock_000018141330SmallA Nation of Smartphone Junkies

It’s a truism that an overwhelming number of people today are addicted to their electronic devices. According to Pew Research, the cell phone has been the most quickly adopted consumer technology in the history of the world. Over 90% of American adults (97% of the under-35 crowd) own them. It is estimated that by the end of this decade, all but the oldest, youngest, poorest and most technophobic among us will own smart phones.

We use our phones as camera, alarm clock, board game, metronome, magazine, map, bank, GPS tracking device, bank, TV, and more. Mostly, though, we use them for their original purpose: to stay connected. We can reach out to friends and family members instantaneously, and know where our kids are at every moment of the day or night. We can keep up on breaking news while hiking in the Adirondacks. We can watch a revolution unfolding in the city center of a Middle Eastern country thousands of miles away. Increasingly, we can do more than one of these things at a time. [Read more...]

Meet the Millennials

polaroid_1Multi-Faceted, But Not Beyond Understanding

Retailers need to tune into the 18-to-30 crowd that comprises almost a third of all Americans – a bigger population segment than Baby Boomers. The Millennial generation numbered 79 million in 2011, with an outlook to stay at 78 million by 2030. Meanwhile, Baby Boomers will be retracting from their current 76 million to 56 million by 2030. This enormous segment of the population tends to make more transactions, but spend less per transaction. They have discretionary income and are willing to spend it… but the question is how, and where? The answers can be contradictory.

At MasterCard, we have seen data pointing to some varied behaviors within the Millennials category, as well as how they like to shop and how they’ve started to change the nature of shopping itself. Not surprisingly, a comfort level with technology has a lot to do with their ease in navigating the multichannel retail landscape – after all, they’re the ones who’ve made social media into the retail marketing tool it currently is. MasterCard has data from 80 billion anonymous credit card transactions to help better understand the needs of the Millennial consumer segment. [Read more...]

The Harder They Fall

ex_tiger_woods_watchConsumers love celebrities and are more than willing to fork over billions of dollars for things they endorse. But do you want them to land on your product when they fall from grace?

That multi-million dollar celebrity endorsement deal for your store’s organic clothing line is going gangbusters, with sales soaring 20% in just four weeks.

But then your squeaky clean, environmentally-active spokesman is caught in a sleazy hotel room wearing a sequined ball gown, with two underage prostitutes, a German shepherd and a bag full of crack cocaine. What now?

A little over the top? Maybe. But when it comes to celebrities nothing is impossible. As someone once said, “you pay your dime and take your chances.” [Read more...]

What’s Wrong With This Employment Picture?

Last week’s employment data looked pretty rosy. The economy added 175,000 new jobs in May, according to the Bureau of Labor Statistics, more than many economy-watchers and investors anticipated, but not so many that the Fed might be tempted to tighten credit. Retail jobs comprised a sizable chunk of the increase, a net gain of 28,000, indicating an underlying bullishness on the part of retailers about consumer spending, since May is not typically a big hiring month for stores.

Looking behind the numbers, however, particularly in light of other recent economic data, a murkier picture emerges.

Job Growth is Slow

First, despite May’s jump, overall job growth has been painfully slow for the past year, ranging somewhere between 1.5% and 1.7% per month on a 12-month smoothed basis, as the chart below shows.

Click to enlarge chart

Click to enlarge chart

 The unemployment rate, though close to a four-and-a-half year low, actually increased in May, from 7.5% to 7.6%, as news of the improving job situation caused many of the unemployed who had given up looking to reenter the job-hunting fray.

Click to enlarge chart

Click to enlarge chart

And, as is usually the case this time of year, over a million newly-minted college graduates were thrust kicking and screaming into the real world (or at least back to their old bedroom at Mom and Dad’s). This year’s crop carried record loads of student debt.

New Jobs are Low-Level

Yet another problem is that the jobs that are being created are not exactly the most sought-after, and tend to earn less than those eliminated during the recession, a phenomenon that shows no sign of reversing itself any time soon.

For example, restaurants and bars added a whopping 38,000 jobs in May, evidence that people have finally started to eat out more, usually a sign of an improving economy.  However, these jobs tend to pay less than minimum wage – certainly not enough to eat out very often!

Professional and business services added a lot of jobs, too. But despite the media cacophony about a surge in tech and other math-and-science-related fields, only 5,000 jobs were in computer systems, and another 6,000 in engineering – hardly enough to satisfy the hundreds of thousands of recent IT and engineering graduates. The greatest number of new jobs in the professional services sector – 26,000, to be exact, was in the not-so-lofty temporary office help area.

Last month, one in every six new jobs was in retail. In fact, as the chart above shows, retail job growth has been outpacing that of total employment in the US since late 2012. However, most of these jobs are hourly jobs at the store level, and pay at or slightly above minimum wage.

Sluggish Income Growth

Income growth has been sluggish for the past several months, further evidence of the beating paychecks are taking, which means that the rampant price-and value-consciousness will persist for a while, and will continue to wield a huge influence on consumer behavior and retail strategy.

Click to enlarge chart

Click to enlarge chart

Stagnant Spending

Finally, consumer spending is nothing to get excited about. Although sales of durables like automobiles and furniture have been brisk, spending on nondurables like food, clothing and personal care items has slowed in recent months. Much of the slowdown is due to lower prices on food and gas, but nonetheless threatens to intensify the share wars taking place at retail.

Click to enlarge chart

Click to enlarge chart

It’s probably worthwhile to point out that while all this hiring was taking place, the Dow and S&P each continued their upward climbs, bringing year-to-date stock market gains to over 15% and reinforcing the wealth effect among the high-income folks. This has been fueling growth in luxury retailing and intensifying the polarization between haves and have-nots. How long this will last depends in large part on the financial markets. A big stock market correction could put the brakes on luxury spending.

Who’s Hiring At Retail?

Retailers, anxious to gain whatever share they can in this low-growth market, are making sure they are sufficiently staffed. General merchandise stores, including variety and the very popular dollar stores, have added the most jobs so far this year, at 44,000, as shown in the chart below, almost half the 93,000 new retail jobs. Dollar stores have been expanding their brick-and-mortar footprint faster than other channels.

Department stores have added 22,000 jobs, both in-store to provide improved service, and at the corporate level to fill expanding e-commerce and social media departments. Specialty apparel stores, many of whom are closing underperforming doors, have sustained a net loss of 17,000 jobs so far this year.

Click to enlarge chart

Click to enlarge chart

Amid all the uncertainty, though, the tough job market has been a windfall for retailers in one key way. These companies have access today to some of the most educated, innovative, tech-savvy and creative talent ever. Retailers should identify the high-potential employees early in their careers, and begin grooming them to be the next generation of industry leaders.

Innovators Unite!

kennethwalker“I told you so” seems to be the rallying cry of all the retail pundits out there who think they were smarter than Ron Johnson.

Every one is throwing stones and is offering multiple reasons for what went wrong at JCPenney. The reasons for failure are easy to categorize, and I sense a bunker mentality is settling over the retail community.


In a business where real change comes very infrequently, the danger of the JCP fiasco may be the end of trying to do anything innovative. Many companies try and fail, but learn their lessons and bounce back by trying again.  The worst thing JCP can do is to go backwards to the status quo.

The vision Ron Johnson brought to the table was revolutionary.  The execution in hindsight was clearly flawed. Unfortunately very few people even got to experience what “the vision” was, as few elements were completed. It could have been a game changer for the retail community.

Current JCP management has a very focused and talented leader. The key investors in the company are smart and have the future in mind.  I hope this team will execute properly and harness the vision and innovation that Johnson began.   It would create a sorely needed new, and unique, customer experience.

Shoppers are always looking for something new. If they try it and like it, they will come back and tell others.   Word of mouth has a very big mouth…it’s called twitter and Facebook, Instagram, Pinterest, and the rest of them.

The poor execution of a vision should not be an excuse to abandon innovation.

Rules of Engagement

Cotton’s 24-Hour Runway Show and Push-Pull 2.0

Click to See Chart Full-Sized

Click to See Chart Full-Sized

The retail universe has long-since expanded beyond the confines of physical floor space and time. Online retail outlets have made shopping a 24-hour option for brands with or without brick-and-mortar complements. Brand marketing, too, is now a brave new digital world in which presence and consumer engagement are essential cogs in the machine. To succeed, there must be a synchronicity of disparate channels that encompass traditional advertising, digital advertising, social media and most importantly, the often-unpredictable consumer.

Hyper-dimensional marketing, or Push-Pull 2.0, plucks multiple messaging strings in the hopes of striking a chord with consumers. In traditional push-and-pull strategy, push referred to offering incentives to the supply chain, and consumer marketing was the pull. Today, Facebook, Twitter and the like, have shifted the strategic emphasis squarely on the consumer; push is now defined as brand outreach to the consumer, and pull is their outreach to the brand. The objective is to enthusiastically engage the co

nsumer in the brand experience; to have them participate, promote, and eventually purchase. [Read more...]

Millennials in the Workplace – True or False

grace_ehlersWe Millennials can be a little difficult to decode at work; our incessant attachment to our phones; our buddying up with senior executives; our loose understanding of office hours. Many of our coworkers ultimately begin to believe that we are haphazard workers and that everything you need to know about Millennials at work can be had from any Girls episode.

I am here to tell you otherwise: Millennials are incredibly dedicated workers—many of us placing work before our relationships and lives outside of work. Here are a few myths about Millennials in the workplace, busted or verified, to help you actualize the potential of your Millennials on staff.

1.They do not have a strong work ethic.

FALSE: This is the top Millennial-in-the-workplace myth I have come up against over and over again as a Millennial brand consultant. There are many reasons for this misinterpretation. They may be lackadaisical about office hours, but they will answer your email at any time of the day, any day of the week. They may be wallflowers inside sales meetings but will lead dynamic, impromptu brainstorms. Give them the benefit of the doubt and encourage them by showing them you have confidence in their work—they will show you their work ethic is strong and sustainable.

2. They feel they are entitled.

½ TRUE, ½ FALSE: While Millennials continue to be humbled by a 68% diminished net worth compared to the generation before them, not to mention crippling student loans, Millennials do feel entitled to a piece of the pie. In their eyes, pay scales should be relative to hard work and productivity, not exclusively based on seniority. Which is to say, yes, your associate is eyeballing your salary and willing it to be adjusted to his or her 20-hour workday.

3. They expect to be promoted without the years of experience necessary to warrant the promotion. They seem to think they can fast track it to the future.

TRUE: This is the #1 point of tension between Millennials and generations past. In our eyes, if we have the skills and can handle the responsibility of our superiors, and have demonstrated that we can, why shouldn’t we be allowed to advance? Why measure experience by time instead of skill level and capability? In your eyes, experience is developed over time. Agree to disagree.

4. They are not loyal and will bolt to another job if they feel like it.

½ TRUE, ½ FALSE: Millennials are very loyal employees, but if they feel stifled, or if the only way up is out, they have less than no problem showing you they know how to use the door.

5. They want to be part of the decision-making process, no matter what level they are.

TRUE: A truism of truisms for Millennials is that they want to be involved in the decision-making process; politically, professionally. What they love about work is seeing how their work ties into the bigger picture. Bringing them into the formation of that bigger picture will not only make their contributions richer, it make them emotionally invested in the company—and you will hold on to them longer because of it.

What Your Intern is Really Thinking

Intern at workI’m here to set the record straight about the Millennial work ethic, by giving you a little insight into the world of internships. They have become the popular alternative to entry-level positions, and businesses have convinced my generation that this is an acceptable way to start a career. If you don’t continue on to graduate school (hoping that the job market will open up when you get that Masters), many of us find ourselves in a job black hole where we can’t practice what we’ve learned, and at the very least, pay back our student loans on time (the average in 2011 was $26k). And all this plays out with collateral damage in terms of Next Gen’s loyalty to employers and desire to build a long-term career with one company. Remember, we are risk averse, want financial stability and a future worth working for.

What’s really happening here? All businesses today, from top corporate hedge funds to design firms to retail stores to your neighborhood nonprofit, rely on interns. And let’s face it, you can get just as much out of an intern as you can from entry-level staffers — right? So why not give some deserving under-employed college grad the chance to beef up their resume, right? You’re really helping alleviate the famed Millennial unemployment rate (now 13%), right? What kind of 20-something really needs job security or healthcare, right? [Read more...]

Are Apparel Retailers Shooting Themselves in the Footprint?

The Shift To E-Commerce May Be Too Much, Too Soon

On a recent afternoon I spent 20 minutes doing errands that a year or two ago would have taken me about eight hours to do.

Instead of jumping into my SUV and taking multiple trips to various big box and discount stores in my town, I strolled into my home office, powered up my trusty PC, and “went to town” in a different way. With a few clicks of a mouse I bought two or three carloads’ worth of stuff ranging from garden tools and patio furniture to office supplies and groceries.

Most of my purchases were made on pure-play e-commerce sites. Comparison shopping helped me get very good prices and free delivery. One category of merchandise failed to figure into my flurry of e-consumerism, however: I did not buy a single stitch of clothing. I am one of those people who prefer to shop for clothes in brick-and-mortar stores. I need to see, feel and try on clothes before I buy them to make sure they fit, look good and meet my quality standards. I do not trust computer monitors to accurately display important details like fabric, color, drape or weight.

It turns out I am not alone in this. According to e-commerce intelligence firm eMarketing, total U.S. e-commerce sales rose to $200 billion last year, or 7% of the total retail business. It is estimated that the portion of total apparel sales purchased online is much smaller—by some estimates only 5%. Making matters worse, returns of online apparel sales are as high as 40% for some retailers.

Online apparel sales, though growing, remain a relatively small part of the business because consumers need to touch, see and try on. Sucharita Mulpuru, analyst with technology powerhouse Forrester Research, feels that “the in-store experience remains a critical part of the buying process for discretionary items like apparel.” [Read more...]

Drexler Hits the Nail on the Head Again

The Robin Report - Mickey DrexlerHey folks, I hate to suck up to Mickey Drexler, and I assure you I am not, because he has once again nailed a major and very dangerous value shift taking place in this industry. He’s said it before in different ways, as have I. And, I’m going to follow him this time, essentially “doubling down” on his points.

I’ve called what’s going on with discounting, which is now on the steroids of the e-commerce “deal machine,” the “lowering of all ships,” “the race to the bottom,” and, I’ve even speculated, and actually built a pretty good case, for predicting our economy drifting into a deflationary cycle. [Read more...]

A Private Story

(The Names Have Been Changed to Protect the Innocent)

He’d been an interesting but troubled friend in my youth. Tom had arrived at our fancy New England boarding school as a shy eighth grader interested in books, politics and music. He told us that his father, who was a 63-year-old New England gentleman farmer when he was born, had been T.S. Eliot’s roommate at Harvard. That story was beyond the construction abilities of 1960’s teenage braggadocio, so we believed him.

The Robin Report - PrivacyDuring the spring of our junior year his father died, and Tom lost it. He failed his final exams and was told he had to go to summer school to keep up with his class. He returned in the fall and promptly dropped out. In our yearbook we put a picture of Tom holding up a dime (the cost of phone call back then) and a seven-digit telephone number.

The late teenage years can be a very troubled time. Paired with the political and social climates of the era, Tom’s issues were not unique, just early. Ten percent of our boarding school graduating class that year was dead within a year of leaving school, mostly due to suicide. It was the goody-two-shoes guys that went first, having been shocked at how different the world was from what they’d been led to believe.

I graduated and promptly rented an apartment for the summer in Boston where I had a job with a publishing company on Beacon Hill. Halfway through the summer, by what circumstances I don’t recall, Tom turned up at my door with his pregnant girlfriend seeking a place to crash. They stayed in the apartment until my lease ran out in the end of August. She found a job, he didn’t. As I left for my freshman year in college, they moved into the back of Tom’s aging farm Jeep. I didn’t see them after that. That was 42 years ago.

I am not big on reunions. I went to my high school’s 20th and got asked by some sniveling Boston Brahmin where I “summered,” and realized I had not fit in back then, much less now. I did have a conversation with someone about Tom. Over the next 20 years I crossed paths with the same person three or four times. Each time we talked about him. [Read more...]

Derailing the Showrooming Scare

The Robin ReportIt’s easy to see why showrooming is keeping many brick-and-mortar retailers up at night. In fact, it looks like the beginning of a bad epidemic-outbreak movie — some retailers even feel powerless to slow its advance and are reduced to simply watching, one by one, as those around them succumb and close their doors for good.

But in reality, retailers aren’t powerless against showrooming. They have a choice: they can either combat showrooming or embrace it. The decision to combat or embrace it depends on the level of susceptibility a retailer may face, which in turn depends on the demographics of the retailer’s target customers, product price points and merchandise type.

Demographics. A recent Kurt Salmon and Prosper Corporation survey of 8,000 consumers revealed that 70 percent of consumers ages 25 to 54 with smart phones use them to comparison shop, up from 62 percent a year ago. And of those who use their smart phones to comparison shop in-store, almost one in three ultimately buys the product online, according to ClickIQ. Older consumers are getting more comfortable with showrooming as well. The Kurt Salmon survey found that 49 percent of consumers ages 55 to 65 use their smart phones to comparison shop. And as the population ages, the percentage of the population showrooming will continue to grow.

Perhaps not surprisingly, wealthier consumers are also more likely to showroom. The Kurt Salmon survey showed that 65 percent of consumers with incomes over $150,000 a year comparison shop on their smart phones, compared to only 56 percent of consumers who earn under $50,000 a year. [Read more...]