NRF Big Show 2010: top 10

Pgina 1 de 6

NRF Big Show 2010: top 10

ANGELA RUMSEY, CLAIRE F HAMILTON, WGSN 21.01.10

The annual National Retail Federation (NRF) Big Show provides a

timely insight into the mood and ambitions of US retailers as they
face the challenges of the year ahead. WGSN highlights 10 ideas to
emerge.
WGSN Top 10
It's not cool to be excessive
Connectivity is the new (luxury) aspiration
Like social, love mobile
Brazil takes centre stage
The new cost pressure
Act fast but stay consistent
Automated targeting
Create lasting memories
Make employees happy (and famous)
Sustainability: small changes work

About the event

The US's National Retail
Federation (NRF), Retail, held
its 99th Big Show in New York,
January 10-13 2010.
www.nrf.com/annual10
Look out for further coverage
from Retail's Big Show in the
coming weeks on WGSN.

Related reports
Leadership matters: Tesco's 10
management lessons
WGSN News: Global Powers of
Retailing 2010
US retail: December samestore sales analysis
Retail's Big Show 2009:
consumer insights
Brazil's middle class: targeting
new consumers

Around the Big Show

It's not cool to be excessive

The economic crisis has reset consumer thinking and behaviour. Speakers
across sectors discussed the renewed US consumer focus on value and a
shift away from conspicuous consumption.
Designer Tory Burch notes that the luxury female consumer her company
targets has changed her thinking: "People are still spending but it's no
longer cool to be excessive or gaudy. It's about elegance and
understatement." In line with this thinking, consumers are now more
interested in mixing "the highs and lows" - upscale brands with lower cost
items.
Consumers are demanding versatility and are also choosing to update
outfits "without having to go all the way". Burch has responded by
experimenting with more entry-price items such as small leather goods,
eyewear and scarves. Accessories are now outselling apparel three to one
and the new categories are performing well.
Consumer interviews conducted by Resource Interactive showed that
women on shopping trips are now hiding bags from more upscale
retailers, for example Saks, inside bags from more mass-market retailers
such as Gap. Pre-crisis, they would do the opposite. "This is the new age
of frugality," said Kelly Mooney, Resource Interactive's president and
chief experience office. "It's a shift from conspicuous consumption to
conspicuous curtailing."
Communications spend is also more moderate than before. Kimberly
Grabel, SVP marketing and advertising at Saks Fifth Avenue, said: "Direct
marketing has always been core to our strategy, but the change is our
focus on local marketing. There are fewer big, splashy parties - we see

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010

NRF Big Show 2010: top 10

Pgina 2 de 6

more return on investment in smaller groups. Also, we can do less costly

social networking/media where appropriate."
"Simplicity is an imperative today," said Beth Furtado of Brazilian
consulting group Alia. The Hotel Everland, for example, demonstrates
consumers' new appreciation for economy of style - the concept hotel is a
mobile, temporary unit with just a single room, moving to different
locations around the globe.
To create novelty for the customer who values simplicity, Ken Nisch of
retail design firm JGA recommends tapping into self-expression. The
concept works especially well at children's store American Girl Place on
5th Avenue, New York. The brand LittleMissMatched sells everything in
threes, he said, letting girls wear mismatched socks and "offering selfexpression as a value".

Tory Burch

Marc Gob

Steve Sadove

Connectivity is the new (luxury) aspiration

Consumer aspirations today are now less about traditional definitions of
luxury and more about wanting to be connected, according to Marc Gob,
author and president of Emotional Branding. Connectivity as an aspiration is
driven by innovation in the consumer electronics sector as technology firms
such as Apple create must-have products and consumers desire to be
constantly kept in touch.
Tory Burch consumers have responded well to being connected to the
brand and designer through social media networks. Burch began using
Twitter just over a month ago and already has more than 15,000
followers. "We are getting a lot of feedback in store with customers
mentioning things they have seen on Twitter," she said.
Consumers also wish to connect with designers and Steve Sadove,
chairman and CEO of Saks Inc, noted a growing demand for personal
appearances. Last November's Fashion's Night Out, for example, brought
between 40,000 to 50,000 people in store. No discounts were offered instead visitors had the chance to mingle with designers. "People wanted
to touch, feel and live the lifestyle with the designers."
Marcos Gouva de Souza, from Brazilian retail and marketing consultancy
GS&MD, described the rise of today's neoconsumer, who is defined in
terms of his digital savvy and desire to be kept informed and in touch:
"The neoconsumer is digital, multi-channel and global. [Retailers must be
involved with] the internet, mobile and interactive TV, which is coming
very soon."
Connectivity also drives a sound business case. Alberto Serrentino, senior
partner at GS&MD, said: "The multi-channel generation spends 50 per
cent more than the store-only customer. In the future, digital channels
will account for the biggest proportion of spending in global business."
One way to create emotional connectivity is to provide customer
interaction online, even involving customers in the editorial content of the
site. Doug Mack, a VP at Adobe, referring to publicly-generated content,
said: "Another shift we expect is more 'open-site' web content. On
www.backcountry.com, for example, customers can upload photos of
themselves using the camping equipment they purchased."

Like social, love mobile

Social media was a hot topic at Big Show. Sucharita Mulpuru, VP and
principal analyst for e-Business at Forrester Research, noted that one of the
reasons web-based retailers outperform other retailers is the emphasis they

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010

NRF Big Show 2010: top 10

Pgina 3 de 6

place on social media. However, web retailers are also one step ahead in
recognising that "a mobility revolution" is on its way.
Benchmark studies worldwide show the growth in mobile internet: 58 per
cent of mobile phone users in Japan use the mobile internet at least once
monthly, 45 per cent of Chinese do the same, while in the US and UK 16
per cent do. Consumers are becoming accustomed to buying mobile
content and services, and mobile commerce sites also attract interest.
Fashion online retailer Yoox launched a mobile test site in April last year without announcing it - and received orders from 710 customers in the
first month.
Consumers also use mobile for multichannel retail: 62 per cent of North
American consumers have used their mobile phone to locate a nearby
store to purchase specific product and 42 per cent have looked up
product information while in-store, according to the North American
Technographics Retail Online Survey, Q3, 2008.
Mobile phones will be the biggest influence on economic growth in
emerging markets due to their wide availability, according to Marcos
Gouva de Souza of Brazil's GS&MD. "Emergent markets are more
important due to mobile networks as a means of social inclusion," he
said.
Gouva de Souza also said that interactive TV is coming very soon. The
evidence already exists, with gaming devices such as Xbox featuring their
own shows, and Sony Playstation connecting to cable channels and
Facebook.

Around the Big Show

Kelly Mooney

Brazil takes centre stage

Brazil's turnout at the NRF Big Show continues to grow and was notably
strong this year, with the 850 Brazilian delegates making their presence
clearly felt. Not only was their attendance at the show a key talking point,
so too was the country's retail market.
Signs indicate that Brazil - often the also-ran among the emerging BRIC
markets - is finally emerging as an attractive proposition in its own right,
especially as US retailers come to terms with a saturated domestic
market unlikely to return to pre-crisis levels of growth.
Brazil has remained relatively unscathed by the global economic crisis.
Following a mild recession it has made a quick recovery on the back of
"sensible monetary policies", according to Dr Ira Kalish, director of global
economics at Deloitte Research. Its economy is now delivering consistent
growth and the country is set to be an oil exporter by the end of this
decade.
The retail outlook for Brazil is also positive/strong. Especially of note, said
Kalish, is increasing foreign investment in non-food, a sign that the
positive development of other retail sectors, including apparel, will follow.
In addition, the Brazilian government has maintained its social policies to
even out income inequality and bring the lower income section of the
population into the consumer market. According to Deloitte's Global
Powers of Retailing 2010 report: "For the first time roughly half the
population is considered middle class. This represents a major
opportunity for retailers."
Brazil's second largest electronics, furniture and home retailer, Magazine
Luiza, is one domestic player tapping into this new consumer group. Sales
and marketing director Frederico Trajano notes that in 2006 half of

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010

NRF Big Show 2010: top 10

Pgina 4 de 6

Brazil's family income (R$550 billion) came from the lower middle classes
- the CDE demographic - a net total increase of R$118.1bn since 2002.
The retailer's belief in Brazil's development is evident. On September 22
2009, Magazine Luiza opened 50 stores in one day in the country's
largest market, So Paulo, and generated huge media coverage
beforehand with an innovative recruitment campaign.
Saraiva Group, Brazil's largest book retailer, is another example of a local
business tapping into its growing domestic market. Its financial director,
Joo Luis Ramos Hopp, said: "After remodelling 19 of its stores, the
brand had an average increase in sales of 104.5 per cent."

The new cost pressure

"Vendors will start more frequently going straight-to-consumer, changing
the relationships between distributors, retailers, customers and vendors,"
said Marcos Gouva de Souza of GS&MD. This will bring a new cost pressure
to bear on retailers who already face competition from shopping sites such
as www.alice.com. The site bundles together household goods like laundry
detergent and toilet paper, and allows customers to schedule regular
deliveries.
One approach to relieving cost pressures is the cultivation of customer
loyalty, rather than short-term wins. Jon Luther, executive chairman of
Dunkin' Brands, Inc, said: "When consumer behaviour gets out of rhythm
it's hard. But we didn't worry about comp sales - instead we focused on
transactions. A 99 cent breakfast wrap turned out to be more profitable
than a full sandwich. And we focused on customer service, actually
adding people to our stores to drive transactions."
Mindy Grossman, CEO of Home Shopping Network, agreed: "We also
concentrated on units to ensure that customers were still engaged. We
needed to keep a foundation in order to position ourselves for the longterm."

Act fast but stay consistent

The pace of retail means brands need to act fast, in particular around price
promotions, to ensure they remain ahead of the competition. "Consumers
are empowered in a way they never have been before, and they need
visibility with a consistent view of the truth," said Michael Griffiths of
Microsoft.
Marcos Gouva de Souza of GS&MD noted: "Consumers' perception of
retailers and trust is changing, and prices and profitability are also
changing as consumers now have the ability to check and compare
prices."
Technology will play an increasingly important role in centralising control
around promotions, and allowing retailers to create consistency across
store networks. Microsoft Dynamics AX, for example, was one software
product discussed and is used across the supply chain, from store
managers and corporate to customers. The software allows a central
corporate office to instantly roll out changes, like price promotions, and
also adjust to regional differences. Speed and flexibility enables all instore decisions to be made in an instant from a corporate office
computer.
Nextune Inc's new internet-based music management system, OnPremise
Music, also allows retailers to take centralised control. Useful for creating
the right branding experience in-store, the product allows retailers to
update, localise and control music being played in store from any
computer.

Automated targeting
Personalisation is a buzzword in product development, but what about
personalising customer experience? According to Beth Furtado of consulting
firm Alia: "People want to be treated in a singular, special way."
One major shift Doug Mack at Adobe is expecting online is "more
automated targeting and personalisation", citing www.overstock.com as a
good example in how it targets its customer both on- and offline. The
homepage displays products based on what visitors have previously
viewed or purchased, and suggestions are made based on other
customers' purchases. When a customer logs into his or her email

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010

NRF Big Show 2010: top 10

Pgina 5 de 6

account, personalised overstock.com banner ads also appear, reflecting

products of interest.
Another target-based technology to watch is radio frequency identification
(RFID), which is already being used in stores. Denis Gingue, SVP and CIO
at Charming Shoppes, said: "On RFID, we're waiting for prices to come in
line but we're definitely watching it. It's clear that retailers are starting to
get involved, especially for big ticket items. As it becomes more
affordable you'll find people investing very heavily."

Matt Kistler

Sucharita Mulpuru

Create lasting memories

"People aren't shopping for product, they're shopping for occasions," noted
Barb Fabing, SVP retail design director, at marketing agency Arc Worldwide,
who believes that retailers and marketers are not fully leveraging the
emotions and senses to create memories around brands. As a brand
marketer, Darren Marshall, a VP at The Coca-Cola Company, agreed: "Our
role is to create a special feeling around the brand, whether that's through
street ads, at retail or in packaging."
Fabing talked delegates through the approach used by Arc to 'stamp
experience' on brands - an approach that can also be used by retailers so that marketers can anticipate the consumer experience of the brand.
"Create value and specialness to create lasting memories that make life
richer for both the consumer and the business," she added.
The process runs through several stages. For example, using Coke's red
can as an example: ground yourself in the brand's intrinsics (the taste,
colour and sounds of Coca-Cola); consider brand expression (packaging,
photography and logo); and understand the extrinsics or how it makes
users feel (an American icon, shared among friends). Once this has been
established, brainstorm among agencies and departments the anticipated
experience a consumer will want with the brand (shared during parties
and also everyday, consumed during picnics and around sports events);
and decide on the brand purpose. In the case of Coca-Cola, this was seen
as 'joy in each moment'.
The principle of creating lasting memories is also key to store design. Ken
Nisch, chairman of retail design and strategy firm JGA, said: "At Spanish
retailer Springfield life happens in store, while North Face also creates a
real store experience for its consumers."
Marcos Gouva de Souza of GS&MD believes that the emerging
neoconsumer "expects much more, for less, from the store experience.
They want human integration, and more design and technology of course,
but more than this they want human interaction."

Make employees happy (and famous)

Recognition of the role people play within a retail organisation was a major
theme as speakers cited examples of the contributions staff had made, not
only on the shopfloor, but also in business development. Retaining talent
and motivating staff to become leaders within an organisation was noted as
a sign of management strength.
A company's vision, value and culture matters more than marketing,
according to Tesco chairman and CEO Sir Terry Leahy. When determining
its values, Tesco spent a year consulting staff on what these should be.
Their answers became the supermarket group's core values which, notes
Leahy, helped to engender trust and self-confidence among staff in the

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010

NRF Big Show 2010: top 10

Pgina 6 de 6

business and created a climate where people feel they can step forward
with further ideas and suggestions.
As part of its mantra of putting people first, Brazil's Magazine Luiza
makes heroes of its staff by recognising performance. Top employees of
the month are routinely featured on outdoor billboards around their home
cities, creating a buzz with their families and friends and giving the proud
employee a taste of fame.
On an even more personal level, Brazil's leading chocolate retailer Cacau
Show decorates the cafeterias within its factories with photos of
employees' children.
The Home Shopping Network's Mindy Grossman said: "During the
downturn we wanted to keep the passion and engagement of our
employees. We have live 'town hall' meetings every six weeks, constant
emails explaining why we do things and a visible management team."

Sir Terry Leahy

Mindy Grossman

John Luther

Sustainability: small changes work

Some businesses may be focused on taking 'game-changing' initiatives to
drive forward their sustainability agenda, but the effectiveness of smaller
actions should not be underestimated.
One way to achieve this is to engage your staff with sustainability,
explained Matt Kistler, SVP, sustainability, at Wal-Mart Inc: "Integrate
sustainability throughout the company so that people can set their own
goals and be involved." The retailer's 600,000 associates have made a
personal commitment to sustainability, whether a personal health goal
such as quitting smoking or a household energy-saving activity.
"It has also opened them up to opportunities in their own business units,
and associates are engaged to make suggestions," said Kistler, who cited
one example of an associate in one of its US stores questioning the need
for the front panel of staff vending machines to be lit up. After switching
them off, WalMart saved $1.4m in energy costs - a powerful example of
staff engagement contributing to the business.
Mindy Grossman, CEO of the Home Shopping Network, said: "We
heightened our attention to sustainability. We got rid of Styrofoam
peanuts in packaging, and we also look for green products that can
replace traditional ones. For instance, we launched the first heated, nonstick GreenPan frying pan and we've already sold 2 million."
Dunkin' Brands' John Luther noted that sustainability is difficult for the
fast food restaurant. "We wanted to get rid of the Styrofoam cup but we
received negative reactions when we did, because the paper cup makes
coffee less hot. It's a constant battle but it is a target for us. We'll find
that cup, but there is a cost issue. But we're going to crack the code."

WGSN 2010

http://www.wgsn.com/members/business-resource/research/br2010jan21_090427

11/02/2010