Retail, in the eyes of the everyday customer

While I love the idea of persona driven retail strategy I hate the secrecy around it. We need to extend personas beyond internal use. Personas are more than just internal customer profiles and can actually be used during the shopping process.

I’m a total fashion dud. I would love to go to nordstrom.com and select my persona

Age Group: young professional
Job environment: non-corporate
Travel: frequent
Location: chicago (believe it or not work dress etiquette’s vary by city, I learned this the hard way)
Lifestyle: active
Taste: eclectic

Now, Nordstrom already has this profile on file so instead of having me guess who I am why not just present personas and let me pick the profile that best describes me. This is great for Nordstrom because they know way more about a specific persona than they do about a Rishi Rawat.

The same idea can be extended when shopping for someone else. Instead of guessing what my girlfriend likes I could just pick a persona that best describes her and have the system tell me what she’d like.

PS: I’m not sure if this system will work for women shoppers too.

Here is another idea related to the idea of opening internal information.

50 years ago successful retailing needed more than a great idea, it involved:

• Deciding store location(s) (the famous location, location, location adage)
• Guessing the right product mix and price-points
• Great wholesaler deals for maximum margins
• Well trained staff
• Relationship with the right ad agency
• Significant financial support

Today, the entire value chain has been democratized: production can be contracted in small batches, the need for physical stores has been mostly eliminated and access to customers is cheaper than ever before.  Once again the QUESTION is king.  When Reed Hastings dreamt up the movie-in-your-mail idea he didn’t have to worry about access to capital markets or Hollywood studios, he just ran with his idea and let his customer-base crush the store video rental dinosaur.

This then is the new paradigm facing the Nordstroms and the Zales of this world.  They will need to re-imagine the world without the constraints of the things that tied them down when they first built their empires.

The web has truly flattened the retail world and the old guard with their brick stores and huge advertising budgets don’t stand a chance because the new kids on the block are insanely smart.

While on my GMAIL account I came across an ad with a very clever copy:

Obviously I clicked on it as do half a million other people every single month. Let me rephrase, 500,000 plus people visit coffeefool.com every single month.

Now let’s put this into perspective. Starbucks sits on the magic quadrant of coffee retail. It’s a powerhouse with over 13,000 coffee shops in more than 35 countries. Starbucks uses so much coffee that global production has been affected. Coffefool.com, on the other hand, none of us have ever heard of before. Starbucks sells coffee exclusively through starbucksstore.com. Here is a traffic comparison:

Have you ever walked into a Foot Locker outlet and asked the sales associate for a pair of vegetarian shoes? Neither have I. But did you know vegetarian shoes is the fastest growing category on zappos.com (second largest online shoe etailer behind JC Penny largest online shoe etailer)?

So, why didn’t Foot Locker this of this category first? After all they are a profit driven company.

The truth is that Foot Locker never knew people wanted vegetarian shoes and there was no way for them to find out. The reason this category works on zappos.com is because the incremental cost of creating a new category online is zero. For Foot Locker, on the other hand, adding this category would mean dedicating shelf-space on multiple retail locations to serve the 50-60 odd people who inquire about such products at each store. Online, these pockets of mild demand can be woven together to create a rather profitable category.

PS: I heard about this vegetarian category at a talk by Chris Anderson at Ad:Tech.

OfficeMax discovered that by keeping too many products in their store they started losing margins because associates were spending inordinate amounts of time helping customer find products. More choice was causing lower satisfaction levels (an idea eloquently described in ‘The Paradox of Choice’). Does this apply online too?

CEOs are under tremendous pressure to beat quarterly earnings and so, naturally, the only thing they care about are sales. But paying too much attention to the cash register could be fatal. Among the customers that shop at your store there are 2 kinds of personalities: those that shop because they simply love you and those that shop for the lack of better alternatives. And while the cash register sees both groups as one the truth is that they are completely different. A retailers survival depends on growing category 1 while eliminating category 2.

I shop for movies at Blockbuster only. I am fully aware of Netflix and have heard great things about it plus I hate the Blockbuster store experience and yet I only shop there. This is what we call defection latency. 1 bad experience is not good enough for me to leave, neither is 12 but at some point after that I will defect permanently.

Here is the lesson for Blockbuster: when the head of strategy sees the store layout and thinks ‘boy this is shitty’ but then looks at sales and sees that Netflix has hardly caused any defections this does not mean the store isn’t really shitty and that customers don’t like Netflix, it simply means they are taking time to shake off a shopping habit thats been with them for 12 years.

CNBC started promoting their new website in the October – November timeframe and launched it on Dec 05, 2006 (according to archive.org). In the next 10 months traffic jumped 139%. 334,000 new readers have been added to their previous installed base of 200,000 readers.

So what does this mean?

CNBC is a news portal where content is expected to be king. Yet new design has given them access to more customers than what they originally had. If a design insensitive demographic has reacted this overwhelmingly to a free news portal imagine how they’d react to bad design coming from a commercial eCommerce site?

Before:

After:

Step 1: Type in ‘calvin klein formal shirts’.

Step 2: Click on first ad on the Google results page.

Step 3: Land on the shoes section of the site.