Thursday, June 23, 2011
People around the world are using social media for many reasons. They are meeting long lost relatives or high school classmates on social media sites, watching videos, reading blogs and most importantly for retailers, they are using social media to connect with brands they know and love.
And the numbers show no sign of slowing down any time soon. By the end 2011— more than 63% of Internet users will be using social media. (148 million people) and the number will climb to 67% by the year 2013. (Source: emarketer.com) That’s a lot of people spending a lot of time with social media to do a lot of things.
And while some retailers are just getting started in using social media for their businesses, the industry is steam rolling ahead at warp speed. New social media sites are being created every day and the ways consumers use social media continues to evolve. So the question is - How is social media evolving and how will retailers be able to use it for their retail businesses in the coming year?
Here we present 5 emerging trends in social media. Many of them will be perfect for retailers like you as they seek to engage and share word of mouth experiences with customers in real time across a broad group of users. When you read them, don’t think about where you are with social media today, think about where your business could be if you integrated some of these tools in the coming year.
Consumer content creation—It’s all about being in the stream. Yes, you need to have an engaging presence with social media on your own that inspires people to come back on a regular basis. Now taking it to the next level and getting your brand evangelists and social media community members to talk about your business in their posts will be critical.
Think of it as PR and word of mouth marketing from your best customers. You will need to create programs that inspire them to share what you are doing in their social media posts. When your customers create the content for your business, it's the perfect word of mouth referral- except that it’s on line and a lot more eyes will be on the message!
Niche Location—Niche location social media sites target the exact location of the user and tells others about it. This has a great connotation for retailers who can use location based sites like Foursquare or Gowalla to run contests or make offers to customers who check in when they shop.
Its like getting free advertising for your store in real time, from people who are shopping at that moment! Customerse check in and get discounts, etc and then their friends see on line that they are shopping in your store and may be intrigued to come in and get the same deal. If you want to see how some brands have implemented location based marketing programs, take a look at what Ann Taylor, McDonalds, Starbucks and Best Buy have already done in this area.
Group Purchasing—This trend continues to grow and will expand with more sites in 2012. Simply put, group purchasing is based on the premise that creating a sense of urgency around purchasing will incentivize users to act quickly and to share the information with friends in their circle to insure the deal happens.
For retailers, it’s a great way to get a tremendous amount of marketing impressions for your brand that you could never afford on your own. And while the group purchasing sites take a percentage of the sales generated from the deal (and yes, there is some profit erosion on this first deal and customer transaction), the goal for using a GP site will be to create a longer term relationship with the customer over time to recoup your profit.
Using group purchasing sites like Groupon or Living social or Daily Deals has become a hotbed topic for retailers because they are concerned these sites don’t attract the right type of customers that can be retained long-term. I would suggest that the key to successful group purchasing participation is how you structure the deal and how you prepare in advance to create a process for you to capture contact information from the customers as well as create marketing programs to speak to them after the Groupon is over.
Social Gaming - In 2012 more game applications will be integrated in to social media programs to further engage customers with brands in a fun way. More than 56 million people currently play games with social media on a regular basis and brands that connect with customers while they are using the game platforms are poised to form a meaningful connection with them going forward.
Mobile Marketing - More than 50% of all cell phones will be smart phones in 2012. Consumers understand the time saving benefits that a smart phone can deliver and the social media trends for 2012 call for more mobile marketing programs from brands to connect with customers where they are. Discount codes coming thru phones, interactions with products while in store and QR codes offering information, games and other relevant services will further engage customers with brands and stores in 2012.
Whatever trend you think is right for your business, one thing is certain. Social Media is the way of the future for retailers to connect with customers. Just like creating a website was important 10 years ago and email marketing they way to connect with customers 5 years ago, social media is a trend that is here to stay.
Social media is and will continue to be a way of connecting with customers for your store and if you plan on being in business in 10 years – you must continue (or start!) to integrate these new social media tools into your marketing plans today.
Tuesday, June 21, 2011
I’ve heard lots of dialogue (on both sides of the fence) about Group Buying Sites (e.g. Groupon, LivingSocial, PlumDistrict and BuyWithMe) and how they have negatively impacted small businesses. In fact, I’ve even heard a few stories about how they put small businesses out of business!
These stories include businesses who were overwhelmed by new customers, saw unplanned spikes in demand and businesses where group buying sites created surges in website traffic and need for increased cash flow to manage inventory capacity builds. On the surface, this might lead you to say that group purchase sites are not good for small business. This is one place where I completely disagree!
I'd like to suggest that in fact, it's not the group buying sites fault for delivering "too many customers" to a store that participates, but in fact, it is the unprepared small business owner who has created what I believe are problems that can be easily prepared for.
Think of the impact that product endorsements from the Oprah Winfrey show had on small businesses. Many a lucrative business was catapulted from the dark corners of mediocrity to the bright lights of notoriety by being endorsed by Oprah on her show. How did they ever survive? How dare Oprah promote their products…did she not know she could put them out of business?
In fact, most (if not all) of the businesses featured on Oprah had time to prepare for the impact that the show would provide. The benefit of this proper planning in advance created the positive opportunity that the Oprah effect delivered.
Be Careful What You Ask For!
Any promotion deployed in isolation without regard for the effects on business operations is a disaster waiting to happen. A small business owner must take into consideration the ramifications of a Group Buying Site promotion on all aspects of the business. The financial impact of the Group Buying Site’s offer on gross profits can be easily measured, but the potential investments required in other operational aspects (IT and IS upgrades, staffing, training, inventory management, onsite customer logistics, cash flow requirements, customer relationship management programs) are more difficult to predict. All must be carefully evaluated and considered BEFORE entering into an agreement with a Group Buying Site. Strategic preparation is critical to maximize the potential success of the promotion and mitigating potential risks to your business.
Long Term Value of the Customer
Monday, June 20, 2011
Managing your retail inventory and managing the cash flow that goes into managing that inventory is one of the biggest challenges retailers face. While there are many software programs and templates that exist to help retailers manage the process of buying inventory, I can’t tell you how many retailers I meet who still don’t see the benefits of using one of these systems to help plan their business.
In our never ending quest to help retailers small and large take more money home and not leave it on their store shelves, once again, we offer our rationale on why setting up and managing an Open To Buy program (of some sort) can be effective and why it should be used to help run your retail inventory.
You know what an open to buy is, right? It’s a system used to help plan your purchases on a department or class level and to match your inventory needs with planned sales you expect to do in that time period. A successful open to buy plan will maximize the flow of inventory and improve sales and turnover so that as the owner of the business, you can keep more cash from sales in your bank account and not spend it on inventory sitting on your store shelves that you don’t need.
And while many of you reading this have been in business a long time and are quite knowledgeable about what sells when in your store, there is still some fine tuning that can be done with the help of an open to buy program for a business of any size no matter how old the business is.
Using an OTB program will help you track selling by department on a regular basis and will alert you to shifts in business - very quickly. Reacting or proactively pursuing these shifts can and will save you money and help you drive more sales and profits to the bottom line for your business.
Whether you buy more merchandise because you react to a positive shift in sales, or react to slower sales by canceling or shifting dates on purchases, you can help your business drive more profitable sales in trending categories while reducing the inventory you spend on departments that are no longer selling. So how much money can you expect to save if you use an OTB program? Typical results from running an Open To Buy are turn improvement of between 7-10% the first year and a reduction in purchases of between 5-10% annually. These two things alone can pay for the cost of managing an OTB program and so much more!
And while there are tremendous benefits to using an open to buy program, it is not a silver bullet that fixes all that ails your store. You will need to spend time working on and with your open to buy to make it truly successful. You must not be ambivalent about your Open To Buy. For an Open To Buy plan to fully to succeed, you must be committed to following the plan you set in place and have the discipline to stick to the plan in the course of the year. The results will happen if you stick to the plan!
Friday, June 17, 2011
Next week brings the official start to summer. For retailers, no calendar needs to tell us that as we are already well into the summer selling season and working on marketing and promoting the seasonal products that go with this time of year.
But for those of you that are a little behind in your planning, or you need a reminder about how to maximize your seasonal inventory we offer a few tips on how to make your summer inventory sizzle and shine while making sure you are thinking about the profitable season end liquidation of those products.
By now, you probably have a great display of your seasonal merchandise right by the front door. Hopefully the display is set up in direct sight of customers when they walk in and full of seasonal products and geared to maximize sales. Make sure your display is fun and pull in as much merchandise as you can to showcase your all of seasonal products – and the other corresponding products that go with it in the store.
Don’t forget to include your store windows and any outdoor space (window boxes, benches, parking lots, etc) in your seasonal product displays. There is no better way to entice customers to buy like showing them how the products work and how much fun they are!
Besides a great display, one of the biggest things to help maximize sales of seasonal products is to create a fun and engaging marketing program for them. Summer is all about family, vacation and doing all the fun things we don’t get to do in the colder weather so make your marketing communications reflect the same attitudes.
Remember you have less time to sell seasonal products than you do with your average selling cycle so be sure to market often. Include seasonal products in at least 2 emails per month and use social media to talk about your seasonal products on a more regular basis. (Our suggestion is 2-3 times per week) With social media, don’t forget you can do fun things like picture contests, short videos showing people using the products in a fun way.
If you sell from the web, change your summer product images on the front page often.
A good plan for maximizing sales with seasonal products also includes a strategy for how to liquidate those products at the end of the season. It is critical to your success- and to your cash flow- that you plan the time you want to be out of the merchandise and then back in to when and how you will promote it to your customers.
A good rule of thumb is to plan to sell thru 75% of your merchandise at regular price (This assumes an 8-10% sell thru on a weekly basis for the preceding 8-10 weeks of the season) by 1 month before seasons end.
This allows you one month to take permanent markdowns and move it to a clearance section of the store or to run the merchandise as a POS markdown for the final liquidation.