, October 29th, 2012
The world is waiting for full economic recovery, and the retail sector — the “engine of the American dream” — has a role in that rebuilding. Those were the words spoken and reinforced at the recent Retailing Summit conference in Dallas.
Roy Spence, author of It’s Not What You Sell, It’s What You Stand For, emphasized that to survive, companies must be driven by purpose.
Culture and branding were common themes at the 2012 Retailing Summit conference hosted by Mays Business School’s Center for Retailing Studies in October.
Southwest Airlines puts people first
Southwest Airlines, for instance, is not in the transportation business. Instead, it gives people the freedom to fly and democratize the skies. Great companies offer customers more than quality products or services, they commit to improving the lives of their customers, says Ginger Hardage, Senior Vice President of Culture and Communication at Southwest, the nation’s largest domestic airline. Its fleet of 700 aircrafts serves 100 million customers annually.
By putting people first and treating customers like family, the low-cost airline has built an edgy brand, elevating it to 10th on Fortune‘s “most admired companies” list. Hardage says maverick marketing and promotion played a key role in differentiating Southwest Airlines. In an industry plagued by bankruptcies, bag fees, bad press and overall passenger frustration, Southwest has remained profitable for 39 consecutive years by valuing people (customers and employees), nurturing its culture and changing ahead of the times to remain relevant for the ever-evolving consumer.
Companies must personalize relationships with customers
GameStop’s Jenn McMillen described the $10 billion dollar retailer’s culture as “irreverent.” Journeys CEO Jim Estepa said the teen footwear chain must always “be cool” and embrace diversity. Toys”R”Us, Inc. Vice President of HR Kelly O’Neill labeled his employees “brand ambassadors.” Together, they demonstrated the many diverse ways companies define, cultivate and communicate brand promise and inspirational customer experiences.
In 2010 McMillen launched GameStop’s PowerUp loyalty program. In 23 months, more than 20 million customers signed up for the rewards program. By capturing and analyzing customer purchase information, GameStop personalizes promotions, engages members through “love it/hate it” game evaluations, excites buyers through game reservations, and better drives new sales, pre-owned sales and trades. A PowerUp member who interacts with GameStop through all four of these customer experience options is worth $8x in annual sales what a non-loyalty member who shops one channel, such as only buying used games. This successful program makes GameStop very data rich and able to target and reward customers.
Changing the way people shop
While GameStop’s market share and roster of 6,000 stores surprised many audience members, most attendees had shopped the members-only e-commerce site, Gilt Groupe. Co-founder Alexandra Wilkis-Wilson recapped the luxury flash sale site’s early days, saying, “We didn’t have a business plan when we launched.” With experience and valuable contacts from her work at Louis Vuitton and Bulgari, Wilkis teamed with other Harvard grads and engineers to put sample sale merchandise in the hands of consumers. This mix of knowledge was vital to the business’s execution and the ultimate success of the start-up.
Gilt Groupe has changed the way people shop. Each day members receive highly customized promotional emails based on past purchases, click-through history, gender and zip code. By effectively using data, Gilt personalizes customer interaction with the brand. Gilt also made heavy early investment in its mobile application, which is now faster than the traditional web platform. This further connects Gilt to its affluent, on-trend customer base. In fact, Gilt has only run one print ad in the last five years. Instead it relies on events, public style influencers, social media and word of mouth for customer acquisition.
Fun is needed in business
Teen shoe retailer Journeys builds customer relationships through numerous “cool” events, including the annual Backyard BBQ Tour concerts. By hosting top bands, extreme sports exhibitions, and skateboard competitions, Journeys stays relevant to an ever-finicky young customer through music and unique experiences.
Jim Estepa says the Journeys executive team surrounds themselves with teenagers and young people to stay current with trends, lifestyles and youth culture. Many of the chain’s 1,200 stores are staffed and managed by associates under 20, which energizes the stores. Journeys celebrates and rewards “attitude” among employees through incentive compensation, recognition programs, manager meetings and amazing vacations for top performers.
At Toys”R”Us, engaged employees value bringing joy to children and families. As the world’s leading toy retailer, Toys”R”Us attracts positive people who play to win, but are serious about fun. Kelly O’Neill proposed his department members “are the drivers of the employment brand. Through video, photos, social networks, print and surveys, they communicate that kids are at the heart of the business.”
O’Neill bluntly stated, “We must hire nice, fun people because that’s not something you can teach.” Toys”R”Us’ charity work helps attract people who fit the brand. The company is the largest corporate supporter of Autism Speaks and Alex’s Lemonade Stand, which funds children’s cancer research. They help military personnel celebrate life milestones through gifts, toys, and even baby shower presents no matter where they are deployed worldwide. This consistent and cultivated employment brand message results in high team retention.
Eliminating customer pain points
Retail marketing maverick Jim McIngvale, founder and CEO of Gallery Furniture, reviewed key tenets that drive his business, including:
- Create real value.
- Don’t sell, help customers buy.
- Retailing should be entertaining.
- Micromanage on behalf of the customer.
- Retail is about emotion.
McIngvale recounted how his team prejudged a customer as either not ready or unable to buy. After feeling ignored, she showed McIngvale, who is ever-present in the store, her purse filled with $20,000 in cash. Whether his customers seek the perfect night’s sleep on a $30,000 mattress or to furnish a living room for less than a $1,000 with bargain tent finds, each customer deserves respect.
He shared Gallery Furniture’s commitment to eliminating customer pain points which he defined as “anything that stands between the customer and your company.” The top complaints for his store related to a poor delivery experience. Customers hated receiving dinged-up dining sets and scratched settees. They resented four-hour delivery waits, and worried over welcoming burly men, who offered more brawn than beauty, into their homes. Today, Gallery Furniture applies higher employment screening practices; its drivers wear recognizable company uniforms; and GPS chips monitor trucks, texting customers updates with the exact time their merchandise left the warehouse and when it will arrive at their doorstep.
Create social value in shopping
The Maritz Institute shared its philosophy on “the social life of brands.” The default system of the human brain is “social.” Human beings are social creatures. While most marketers understand the need to create functional and emotional value, businesses are just learning how important it is to create social value though experiences and interaction.
“When a brand makes you feel special and strives to make your life better, in contrast to simply trying to get more share-of-wallet, then social value is created” says Maritz Institute Director Marybeth McEuen. “And social value, at its pinnacle, is created when you join a brand community because you identify with the purpose and ideals of the brand. Great companies like Starbucks and Method understand this type of social value.”
H-E-B is the largest corporate giver to non-profits in Texas. The 340-store chain focuses on putting people and communities first. Its leadership practices “relentless dissatisfaction,” meaning that if they are not working every day to help customers and improve the shopping experience, then they are not satisfied.
Craig Boyan, H-E-B president and COO, reviewed historical fact that the American consumer today has far less discretionary income and far more debt than past generations. With wallets thinner, H-E-B promises low prices to help customers save and live better. While labor costs often top retailers’ expenses, Boyan urged the audience not to race to the bottom with wages, but instead raise them and hire great people. Finally, H-E-B is a multi-format retailer. Boyan noted that his discount stores, such as Joe V’s and Mi Tienda, and high-income stores, like Central Market and H-E-B Plus, are growing the quickest. This reflects the increasing gap between rich and poor in Texas.
As GSD&M’s chief advertising leader for retailers for 30 years, Roy Spence concluded by offering the following recommendations for the retail leaders attending the Summit:
- Retailer leaders have a job to do. To enrich the lives of their customers they must do business with purpose.
- They must practice the Golden Rule.
- Leaders fess up when they mess up.
- They don’t find common ground, they find higher ground.
- Retailers are best when they are in the service of others.
To the 30 students in the audience — likely the next generation of industry leaders — he said:
- Be curious.
- Stay humble.
- Stay hungry.
- Help those who help you.