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Have you grown tired of the Polly Paranoids who have pulled the wool over our eyes the past year that luxury is dead? I have.
The ones who boldly claimed in articles and on covers of business publications, “we are in a whole new world where luxury is dead. And this isn’t just a trend, it is a fundamental shift for shoppers.” Yeah, right. Got it, end of world right around the corner. Sack and ashes. Bad times here to stay. Life sucks.
If that’s the case then why, why did the news come in from Paris that LVMH, the biggest luxury goods company including the Louis Vuitton brand post a profit? Don’t look for widespread coverage of that fact on cable news channels or your local TV station. If anything they’ll have a talking head guy on to say, “yeah BUT…”
For them, Wal-Mart and the Dollar Store are all we could be shopping at now and forever. After all, wasn’t it just about a month ago we saw Warren Buffet decrying a “new world” after the economy “fell off a cliff?”
A WSJ article by Max Colchester details all the brands under LVMH in the article in today’s edition. Here was one quote, “Mega brands are producing results ahead of the market average,” says Luca Solca, a luxury analyst at Sanford C. Bernstein.
Point of this post? The world is still spending on luxury. Hold on to your core customer. Sell your merch. Don’t destroy your brand by discounting. Someone’s getting the $$$ – look in the mirror – maybe its your fault.
If you’d like some help, remember the Retail Doctor makes house calls.
Winning Dress At Target
In an article in Tuesday’s WSJ article titled, Do Discount Designer Duds Make The Grade? by Ann Zimmerman, the writer invited a couple of design professionals to pick out the designer (i.e. better) garment from Target and H & M knockoffs. She wanted to see how they were able to compete on quality. One identified the designer dress by Thakoon, because she said the “fabric seemed to be of higher quality, with a rich color palette and a soft ‘hand,’” the other missed it. He was thrown by the attention to detail.
When was the last time you shopped your competition? I don’t mean in the “we’re so much better then them” mindset but to see what you could learn. Once? Never? I’m not surprised.
When I do a business makeover I invite the owner to go with me but it is like trying to get a child to want to go to the dentist to get a cavity filled. The stress. The doubting. The excuses.
Why? What is there to be afraid of?
I remember one makeover in California. We got in the car and by the time we reached the competitor’s parking lot, the owner was convinced they would “know me.”
After almost dragging him from the car we entered to a clearly sub-par showroom. The products they carried only partially competed with his. After a few minutes a woman yelled across from behind the counter, “Let me know if you need anything.” I turned to look at her.
She was dressed like a twenty-year old in a too-short leopard print skirt with a halter top. She was in her mid-40’s. She might even have been chewing a sandwich or gum. This was the place you would have expected a professional dress code. I whispered to him, “Let that go we’re looking for positives here.”
By the time we got in the car, the owner turned to me and said, “Well they’re not such a big deal.” That was an understatement. Dismissing our encounter with the woman who I later found out was the owner, my client said, “We could upgrade our display with something like that one on the right and it would drive sales.” Exactly and the point of the visit.
Fear of the unknown is worse than the known. You want to compete? Go out today and shop a competitor with an eye for these five things:
You might only have one item or a list – but the attitude to find something good makes it much more valuable.
A mystery shop company can then help you do this for your own store. I have one I’ve used thousands of times and work with exclusively. (If you’re interested, shoot me an email. ) But your first step is to see what competitors are doing right. Trust me, you’ll see what they do wrong but don’t get caught up in the bitchiness and feeling superior; you’ll miss the learning you need.
The judges in the article I mentioned at the outset found some well-made garments and at an affordable price. They also found some quite shoddy while having the “look.” How did the knock offs do it? They shopped the competition.
In an unbelievably slow attempt to limit the damages from a “prank” on YouTube, Domino’s Pizza waited almost 48 hours to respond. Now the entire brand has been compromised, not just a single unit.
The videos, four in total were taken down from YouTube but available if you want to make yourself ill at this blog. They feature a guy putting cheese up his nose, wiping a dish cleaning sponge on his backside and generally doing things we have all wondered about or seen in movies.
I remember when Los Angeles KCBS TV station Channel 2 did an expose of dirty restaurant kitchens. All Los Angeles county restaurants’ business fell off a cliff. Did the CMO and the executive team of Domino’s not know this?
The two culprits were fired and arrested on felony charges even though they say it was a “prank.”
After hiring hundreds of employees, I have to tell you – I doubt this was a prank. Both of these employees were in their 30’s and clearly the store was open and orders were coming in. We’ll never know if the food was absolutely never served or not. You can read all about the incident at the NYT site at A Video Prank at Domino’s Damages Its Brand.
The point is much like my post on Monday about Amazonfail, you cannot be in business and think anything will just “calm down,” if you wait it out. Look at last fall when Motrin made a reference to baby harnesses being painful and how quickly moms got on Twitter to complain. They too took too long but that didn’t speak to mom’s fears of food safety.
Did Domino’s not “get” how this could affect all of their franchisees? That young people, the ones most likely to be on YouTube would say, “OMG – you have to see this?” and send to all their friends?
You can see Patrick Doyle, Domino’s President, YouTube response where he oddly looks off camera here.
Short post. Short point. Two employees destroyed a brand. Avoid the Internet at your own peril.
Oh yeah and hiring the right people makes a difference too.
The WSJ reported in an article, R.H. Donnelley Uses Debt Grace Period by Tess Stynes that the Yellow Pages giant is struggling with debt. The story does not mention why but smart retailers know it is because no one uses them anymore. If you are, get out! And beware, with their sales in trouble their salespeople will be even more aggressive to tell you why you have to pony-up again. Don’t do it!
The Yellow Pages was a smart marketing move when it was the sole book from the monopoly of AT&T before it was broken up. The Yellow Pages slogan, “let your fingers do the walking” was brilliant when it came out in 1962.
A 2004 survey by Opinion Research Corporation found that 55% of people used the Yellow Pages to seek out local merchants, compared to 12% who used Internet search.
That’s of course when using a FAX was cutting edge technology.
Nowadays, who uses the Yellow Pages? Maybe your grandmother looking for a plumber. Maybe.
Forget the out-dated information and demand – who wants to lug one of those 5 pound books up the stairs to the kitchen? Mine are always tossed into the recycle bin. Not to mention the number of dead trees per listing.
You want to be where customers are looking for immediate answers – that’s the Internet. While I could go into all the ways you should be on the Internet, today I want you to visit Google Local. 
Google Local is a feature of their maps and using GPS-like tracking of a customer’s logon location, delivers local results for their search. While you can do a Google Local search and find your business, many times that information is minimal. Go to Google Local and register your business now.
Take the money you were giving Donnelley and use it on the Internet. Customers are still going to let their fingers do the walking, it is just on a keyboard, not thumbing through pages.
An article in today’s WSJ by Geoffrey Fowler And Jeffrey Trachtenberg titled, Amazon Error Removes Gay, Health Books from Search details how Amazon mysteriously removed more than 57,000 books from its sales rankings and main search page including adult, health, and mind & body books.
The Seattle company was then hit by criticism from the authors of those affected books, mainly those focusing on gay themes. You might say, “So what, that Internet site doesn’t affect me.”
What interests me and should interest you, isn’t what dropped off the search or what Amazon’s problems on an Easter weekend were, it is how all of this was found out. Through Blogs and Twitter.
Authors and bloggers were tagging their posts with the keyword “amazonfail” as they discussed the incident. Much of the outcry started after a publisher, Mark R. Probst, blogged about a message he received from an Amazon representative after noticing that rankings disappeared from “Transgressions” and “False Colors,” two new gay romance books.
I’ve written a lot about the happy side of social media, how attracting people is harder than being where they are, how instant communication leads to productive relationships and how fans are able to follow you.
The lesson from this episode is how quickly the word can spread about something you do wrong to a customer. It’s not limited to sites like www.yelp.com or www.TripAdvisor.com. Another good blog can be found about amazonfail at Jackie Huba’s site
Thirty years ago when I was selling Nunn Bush shoes at their store at 7th and Grand in downtown Los Angeles, I had a customer open the door, take off his shoes and throw them at my head – about 30 feet. He told me the “damn soles wore out in a week and if you don’t replace them right now, I’m going to complain to the Better Business Bureau.” The older gentleman I worked with collected the shoes with the holes in the soles, threw them back at the guy almost striking his head and told him to “stay the heck away or I’ll call the cops.” We never heard a word or saw the guy again.
Nowadays that same guy could have entered his information into his Blackberry or iPhone with “#Nunn Bush shoes” to a Twitter post or “Nunn Bush shoes” as tags in a blog post or even started www.ihatenunnbushshoes.com.
My point isn’t that he could have been right or wrong. (Though as a side note I will tell you leather soles wear three times faster when they’re wet so don’t, as that guy did, wear thin Italian loafers during the rainy season walking on concrete.) It is the tools he and any disgruntled customer now have to influence customer opinions about your business and how quickly it can snowball.
Ignore the Internet at your own risk.
The boutiques will outlive the department stores because they are still merchants, we’ll get to that shortly but first…
Jockey underwear reported this week that, “sales of pink underwear are soaring as men use their undergarments to cheer them up in the economic crisis.” Jockey claims that sales of their colored Y-front briefs have rocketed by an average of 60% over the last six months – and the baby pink pairs have sold more than any other, seeing a 62% boost in sales over the past three months.”
The UK’s Daily Mail website concludes, “If claims that men are perking themselves up using their underpants is true, it adds a new dimension to lipstick economics – the theory market-watchers attribute to sales of small cosmetic items rising in a recession, or the fact that hemlines rise and fall with the economic state of the country.”
Hold that thought a moment …
I was in Portand, OR for a presentation with the Oregonian newspaper about 6 weeks ago and stumbled on Finn in the upscale shopping district, the Pearl. The whole store was merchandised with a merchant’s sensibility. Clearly an upscale men ’s clothing store, it stopped your eyes from wandering with overstuffed, handmade, free-trade toys, antiques and other knickknacks that made you want to browse.
I was surprised to see a large display of fancy socks and underwear. The owner came up to me and told me socks and underwear were becoming the coolest thing to accessorize your wardrobe. “Really?” I asked. “The crazier the better,” he said. 
We chatted a bit more about the socks made by Duchamp and I ended up getting a pair myself (at right.) That was the only time he was behind the counter.
Contrast that experience to the one a week prior at Bloomingdale’s, the store who used to be all things trendy, smart and fashionable. Walking through the men’s aisles I found, like most department stores these days, the gang of three employees talking. In the men’s furnishings section there were some interesting items but to this day I still have no idea what they were used for or why they were on top of a counter clearly for sale. (You can try to make them out on the counter to the left in the photo below.)
After staring at them for 2-3 minutes, I looked around for help. Sure enou
gh, the gang of three was behind the castle expecting me to approach so they would graciously stop talking, lower the drawbridge and cross the moat to wait on me.
And here’s the point of this post: it is the boutique operators who will bring us out of the recession. They are the ones who are truly the merchants looking to wow us with new products and convince us to try new things. They are the ones giving a pulse to America. They are where you should be shopping.
Contrast the latest trends Jockey reported to your local Macy’s, Lord & Taylor and other mid to upper tier stores where all you’ll see displayed face-out will be a sign, “25% off Jockey” with a mountain of white.
You want to get more customers in a recession? You’ve got to earn it; even if it means you have to be knowledgeable about men wearing pink underwear so you’ll feature the best-selling, colorful ones upfront, along with colorful socks. And to do that, you have to get employees out from behind the castle and talk up your products.
You can’t invent trends -unless you were Starbucks in the early 90s - but you can ride them. Merchants know this.
Bob Phibbs, the Retail Doctor, has helped thousands of independent businesses compete by using his approach to business and not discounting. He speaks to groups large and small how to grow sales in a friendly, engaging and entertaining manner.
An article in today’s New York Times by Peter Khoury titled, Welcome to Hard Times, the Sales Pitch detailed how local merchants are riding the recession alluding to it in their street signs. One touted, “Wine Bailout Sale 100 Wines Under $10.’’ Another, my personal favorite on a sandwich board advertising a burger special that includes chips and a drink said “‘Stimulus Plan Special, You’ve spent over $1 trillion on pork! What’s $10 more for an Island Burger?’’
Were these big discounts? No, they just put things in perspective with a wink. What I think is so smart about these merchants is they made you look. Isn’t that all signs should do?
The words “recession” and “bailout” are just vehicles to hang your message on because they are topics in the news. Yes there has to be value there but these merchants are creatively looking at engaging their customers who might pass them by – and results have been very good; some in the double digits.
When I was in New York one time a guy was shouting at passersby to come into his electronics shop. As I walked by him he said, “Hey mister, you dropped your wallet!” I turned around to stare at the dirty concrete sidewalk while grabbing my back right pocket as he said, “made you look!”
I said to him, “Smart man,” with a wry smile. He said quickly as I continued walking, “No man you’re the smart one – you still have your wallet.” Which of course made me laugh.
Made ya look.
In a world crowded with signs hawking everything from unlocked iPhones to 70% off retail to 2-4-1, you should use every means possible to shake customers from their numb existence when walking past your business. If a “‘Recessionista Sunday – all dresses come with a free mimosa,’” gets people to consider your business – why not join them with “recession” or “bailout” in your signage?
In a piece entitled The Last of the Facebook Holdouts, ABC News today spotlights the people gloating they aren’t on Facebook. It said in part, “the Web 2.0 teetotalers just don’t understand what the fuss is all about and couldn’t be happier on their own. ‘Some of the great joys in life are meeting new people in person and people watching and spending time with my kids and writing,” said David Vicker, a 37-year-old freelance media producer.’”
Such comments miss the point entirely. It isn’t an either, social media is an AND. You can do that AND be part of various social networks.
According to a March report from research firm Nielsen, two-thirds of the planet’s Internet population visit social networking or blogging sites. Across the world, activity in “member communities” accounts for one in every 11 minutes spent online, the report said. Chances are good those are your customers as well.
In addition to today’s ABC story, a recent poll by the Gift and Home Channel found:
I’ll talk about that but first a story I shared in my book, You Can Compete: Double Sales Without Discounting …..
When I was first becoming established as a retail consultant, I met a little coffee roaster; he had more debt than he had in sales. He had resigned himself to the thought, “It can’t go any lower.”
But it wasn’t always that way.
Mike Sheldrake, Polly's Gourmet Coffee
He had opened a coffee house in Long Beach, California in 1976 and made it stand out by roasting the green coffee right there in his pecky-cedar clad storefront. Being too far ahead of the curve on gourmet coffee, he could have failed but gradually he thrived.
A Starbucks opened ten blocks from him in 1994 and he said, “I know my customers, they’ll be loyal.” And for awhile they were. Then they started to drift away and sales went down 10% over the previous month for each month. This kept up for years.
Mike kept thinking something would change, maybe somehow Starbucks would trip, customers would try them and return eventually but when it really came down to it, his back was against the wall. He could go nowhere else.
When I asked him about his assumptions that he knew his customers, he had to admit, he had been wrong. Mike already had his leverage to force the issue and change how he looked at customers. He was faced with a hemorrhaging P&L statement and saw the consequences of his assumptions.
That’s why I encourage you to let go of all your preconceptions about marketing, sales and how “it used to work.” We are in a new arena these days and it is “change or die.” You can’t proudly cling to the past and be successful in a recession/recovery.
Do you remember the smell of the ditto paper? The ones still warm from the machine? Often still wet so if you got the ones on the bottom, your fingers became purple? Yeah, I remember those too.
Imagine if your teachers had decided, “Nope, no way my students could learn from anything but the blackboard.”
It is dangerous when you say you know your customers – especially when you may be wrong. Mike Sheldrake would be the first to tell you that.
Facebook works for businesses that potentially have fans of the business. Usually businesses with events as well but not necessarily.
I personally like my FaceBook fan page becomes people are pulling my information rather than me pushing it out to them. Same with LinkedIn, Twitter, and YouTube. With all the open rates going down on emailed newsletters it is one more way to get to customers who like you to remember you.
The beauty is that you can set up a fan page quickly and for free.
I’m not going to go into how you start one here. You can do a Google or other search on how to do it. One thing is important to know though right now, you need to setup an individual account first to link to the business page. Also easy.
After using it awhile, you might find FaceBook may not be right for you but another social media site is (see my post on Twitter.) But shouldn’t you at least try it before deciding your customers aren’t on there, you don’t need it or whatever lame excuse your lazy butt is comfortable repeating?
Boost sales by selling it, not discounting it with this system
Bob Phibbs, the Retail Doctor, has helped thousands of independent businesses compete by using his approach to business and not discounting. He speaks to groups large and small how to grow sales in a friendly, engaging and entertaining manner.
His Book, You Can Compete: Double Sales Without Discounting is the backbone of several companies training programs and teaches his methods for making over a business. Download more free tips at http://www.retaildoc.com/ or buy the recording of How To Generate Thousands in Free Publicity.
Become a fan of the Retail Doc on Facebook and follow Bob on Twitter at http://twitter.com/TheRetailDoctor
Numerous articles covered Starbucks shareholder meeting late last month where they talked about the 900 store closings in the US and Canada in 2009. One of them can be read here.
With Starbucks unique ability to spot great locations, the leases already signed and the equipment already there, is Starbucks preparing to franchise those locations? All signs seem favorable.
While they do have some partnerships with notably Magic Johnson in inner-city areas, as a whole franchising is not something Starbucks has or will pursue under their ubiquitous green logo.
The stores aren’t generally big enough to support a Dunkin’ Donuts and I doubt if Starbucks would want any other company such as Caribou Coffee, It’s A Grind Coffee or the coffee company with the worst name ever for marketing -Bad Ass Coffee -to capitalize on their pioneer work to land coffee customers . But…
But what if Starbucks sold off their lower performing stores as Seattle’s Best franchise units? 
You would have the power of the national brand, they could look like they are taking on Starbucks and since Starbucks already knows the market, they could help individual franchisees build on what Starbucks learned. In the end, it would all still feed the same shareholders.
In a press release dated February 3, Seattle’s Best Coffee announced “it will expand its franchising program to offer cafe opportunities in the U.S. This strategic decision to build Seattle’s Best Coffee through franchising allows its parent, Starbucks Corporation, to utilize a multi-brand strategy that leverages both the Starbucks and Seattle’s Best Coffee brands to capture more of the growing specialty coffee segment, ultimately providing options and variety in the marketplace. This decision comes after nearly four years of successful development of the Seattle’s Best Coffee brand, through a national licensing program, to more than 550 cafes across the U.S.” In essence they would be building their own phantom competitor.
It wouldn’t work to sell the 900 Starbucks locations off piecemeal to mom & pop owners as it would take too much time and the new owners would enjoy no name recognition. It would be too much of a leap for coffee lovers to go from the preeminent national chain with high standards to for instance, Vivian’s Espresso House. Plus the fact that the leases, even with depressed demand, would still be more than most single unit owners would be willing to pony up; I know this from experience.
If they asked your opinion on a location and you told them, “the money is at Third & Main, but it’s going to cost you,” a few would come back to you with a location a block in off Main with little foot traffic and impaired sight lines. They would justify it by telling you, “My rent is 1/3 less so I’ll still make money even if demand is 1/3 less.”
This was always a ridiculous way to justify being pennywise and pound-foolish. The best opened at Third & Main.
If you don’t pay it in rent, you are forced to pay it in some type of advertising to get people to find you. The smart money as we all know is location, location, location. You don’t want to be 100 feet from success.
Times are tough for Starbucks, you may have read my post about their new “value meal” breakfast a few weeks ago. They are looking for the transition from coffee craze trend, to staying in business. Franchising, just might do the trick due to their locations.
