Feeds:
Posts
Comments

Posts Tagged ‘Retail’

Everything happens faster in the fashion world. Fashion houses and retailers have to deal with an increasingly turbulent market wherein trends and tastes fluctuate all the time and design styles replace each other in ever shorter cycles. This instability means greater uncertainty for firms, which makes it harder for them to plan and operate through the year. Attempting to curb the motion and introduce more stability can be a serious challenge for the fashion designers, marketers and retailers; the stream is strong, and more often it seems that everyone has to continue flowing to the next fashion style. Retailers with physical stores face an additional challenge from strengthening e-commerce — consumers prefer to buy more clothing items online, especially from whatever source and channel they can find them at lower prices.

Castro is a leading fashion house and retailer in Israel with over 130 stores carrying its name (i.e., Castro, Castro Men, and Castro Kids) across the country. The Castro company  was established by Aharon Castro in 1950. Its retail start was modest, and the business continued to be primarily a fashion house, designing and making garments (for women only), until the late 1980s. In 1985 the founder opened a flagship store on the modern Dizengof shopping street of Tel-Aviv; that may be considered a first brave move to lift-up the image of the Castro fashion brand and earn it more publicity.

In the early 1990s Aharon Castro passed the realm of the company to his son-in-law Gabriel (Gaby) Rotter, joined later by his daughter Esther (Etty) Rotter, and they have been serving as co-CEOs since then. The second period of Castro is marked by the great expansion of the retail arm of the business. More and more stores were opened in the 1990s and 2000s (Castro also made a venture abroad, mainly in Germany, but it was unsuccessful and largely cut-off). In this period the prevailing brand image of Castro was also invented, which gave it fame and appreciation. The last decade has seen more acquisitions of fashion enterprises (clothing and accessories) made by the company, but these do not carry the Castro name and therefore have less bearing on the Castro brand. In summer 2018 Castro merged with the fashion group Hoodies, and the repercussion of this move is yet to be seen, whether the brands mix or remain separated.

Listed below are selected actions that contributed more significantly to establish the prime attributes associated with Castro, exciting and daring, since the 1990s:

Castro aired a famed TV commercial in 1993 that was daring, playful and igniting the imagination — it is best simply to watch it.  Two more facts make this commercial special: (a) It was aired in the beginning of commercial TV in Israel, when the audience was highly curious and interested in advertising in this medium, which helped the commercial to become a “hit”; (b) The song featuring in the commercial was Creep by Radiohead, during the early stage of its musical career, so the commercial gave a unique exposure to Radiohead in Israel. Definitely in those days this Castro commercial was unusual and exciting (until today it is the most loved commercial in the country); it drove great attention and interest in the coats and other clothing products of Castro, and put it on a trail of growth.

In the early 1990s Castro moved into the pivotal shopping centre of Tel-Aviv (Dizengof Centre). Moreover, Castro situated its store near the entrance to the major department store of that time (HaMashbir), a sound call of challenge. A decade later, in 2003, Castro relocated within the shopping centre and opened its flagship store Castro Tel-Aviv, occupying three floors, with an external façade that turns to a strategic corner of streets with high exposure — a strong declaration of their presence. At least for several years it was an important anchor in the shopping centre.

Castro gradually started to enter clothes for men into its stores. Over time the fashion house expanded the scope of its target segments to become a marketer and retailer of clothing for men and women, youth and kids. On the retail side, Castro made two key moves: in 2000 it launched its sub-chain of Castro Men stores, and in 2013 the Castro Kids sub-chain of stores came to life. Perhaps already less exciting to consumers, but they are still daring moves (a demonstration of force).

However, the expansion of Castro’s activities, particularly adding stores to its retail chain, seems to have taken a toll from the company. It is hard to put a finger on a single factor as the cause of recent troubles at Castro. It appears, yet, that the toll has hit primarily Castro as a fashion house. From some point in the passing decade, consumers have been losing interest in the garments of Castro. In earlier decades, Castro led by its founder gained a reputation for creativity, for bringing new designs and quality fabrics (important especially in the 1960s and 1970s, credit going also to Aharon’s mother Nina). Consumers may have stopped believing that Castro’s clothing expresses creativity, novelty and ingenuity. Nonetheless, the needs and tastes of Israeli consumers apparently have changed, and they are looking for something different in fashion and clothing, which also happens to be less original and less expensive clothing.

Firstly, consumers buy more frequently from a variety of online retailers (‘e-tailers’), on top of them is Amazon.com, while getting easy access to broad selections of clothing from abroad at affordable prices. Consumers also are willing to pay less for garments, shoes and accessories of lower quality even if they would have to replace them more frequently. They further tend to inspect garments in physical stores and then buy the same or similar items from online stores. Yet another threatening competition to Castro comes from quick-movers, discount retailers like Zara and H&M that produce and sell garments of similar designs as those of known fashion houses (though they may have some original clothes). A more discomforting revelation of recent years is that a low cost retailer (Fox) is gaining in popularity while Castro is sliding down. The stores of Castro see less traffic of visitors (footfall), thus stores are too quiet for extended periods, and the sellers have too much ‘free time’ to arrange merchandise; a special report on public TV (Kan News, 4 May 2019, Hebrew) indicates that a growing pressure is put on sellers and other staff (e.g., visual merchandisers) to contribute to better results . Could it be that Israeli consumers find the design of stores less attractive; is the visual merchandising in-store less appealing to them; or is it the merchandise itself losing its appeal? We should not overlook the influence of background factors such as changes in the code of dressing (more casual, ‘dressing-down’, sportive) and economic constraints on consumers’ shopping behaviour in clothing and fashion.

  • In 2018 Castro saw overall a loss of 59 million shekels (~$16m), after a net gain of 48m shekels in 2017 and in 2016, and operating profit on clothing has dropped 66%. Additionally, sales of clothing in same stores of Castro+Hoodies fell 7.7% in 2018, above average rate in this sector (Globes, 5 May 2019, Hebrew — this article follows the report on Kan News).

A few ideas may be learned from the American department store chain Kohl’s that is taking dramatic measures in its effort for resurgence, led by CEO Michelle Gass [A]. Some of these measures may be relevant also to Castro, and could suggest directions for the transformation it may also be required of:

Kohl’s is reducing the amount of merchandise displayed in its stores, and is also decreasing the selling space of stores. On the other hand, the retailer installed an advanced inventory technology that allows it to track its merchandise on display at any time (by using RFID tags on product items), and follow purchase data (including online) and analyse it. Hence staff at Kohl’s can predict what products are in greater demand and what merchandise is in need of replenishing in real time, enabling to display less merchandise with no disadvantage.

Furthermore, Kohl’s  developed a capability to trace changes in market trends faster and cut the time needed to deliver new designs to stores (i.e., shorter time-to-market).

Kohl’s introduces new technologies in its stores to improve the service to shoppers and their in-store experience overall, including handheld checkout devices to cut waiting lines at cashiers, and digital price screens that can be updated with less hassle for staff; in addition, the RFID tags aforementioned enable staff to help customers quickly find products they seek (mirrors with holograms or augmented reality may come later).

  • Kohl’s has taken another intriguing step: orders from Amazon can be returned at desks in a hundred of its stores (out of 1,100+ stores). Critics and skeptics regarded this co-operation akin to “sleeping with the enemy” or “bringing a fox into the henhouse”. However, Gass sees in providing this service at Kohl’s stores an opportunity whereby Amazon’s customers already in a store may choose to buy some products they see around, similar to the case when Kohl’s customers who use its “click & collect” scheme at Kohls.com online store later come to pick-up the order at a physical store.

Castro announced recently that it plans to enlarge and redesign some of its stores. Castro Store TelAviv in GanHaIrPerhaps its management should re-consider enlarging stores. Does Castro really need to have stores as large as those of Zara and H&M (1000sqm+)? This may not be effective in terms of (lower) revenue per squared metre [B]. The stores can also be arranged to be more spacious between display exhibits and hold less merchandise, provided that information technology can be used to monitor it cleverly. Redesigning stores may indeed be welcome — current stores could feel too dark-toned with selective spot lights, which may be perceived more elegant but less convenient. Existing large stores may be reduced somewhat, or perhaps may better allocate space to other purposes like special projects (e.g., gallery of new art designs in fashion), a coffee bar or hosting events that may be more interesting than a space loaded with more products [cf. A].  Greater attention should be drawn to the experience that can be generated for visitors in-store.

Another issue concerns the image and experience delivered by the website and online store of Castro. Is the online store not advanced and rich enough? Will more exclusive online offers make the difference? [cf. B] What kind of experience should the website and online store present to visitors? Entering the e-commerce website overly feels like entering a catalogue. The e-store has some nice features like a model’s image changing position when hovering above with the mouse to show the garment from another angle, or being able to see the same garment in different colours. Yet the website appears nothing more than an e-commerce website; it misses something more important — it obscures Castro as a fashion house. The story of Castro and its creations is practically hidden, hard to find. When entering the website, it should communicate the image of the brand Castro — show original designs of the fashion house before start selling. The website should clearly show the “door” to the online store but right next to it should appear the “door” to Castro the fashion house and its story.

Eventually, the garments designed and created by Castro are the main issue to address. This should be an important point of differentiation for Castro from other retailers on which it should make its voice loud and clear. For example, prior to her role as CEO of Kohl’s, Gass identified the rise of the trend of activewear (sportive-energy) style in clothing; she gave it more emphasis in stores with the help of national brands like Nike and Adidas. Castro has a category (online) of Activewear. On the one hand, it can make its voice by introducing its own designs in this category. On the other hand, it should not go only after what seems popular at a time but suggest other modes or styles to the market.

Castro seems to lack sub-brands or endorsed brands up front that consumers can easily identify and associate certain styles or attributes with them (e.g., more daring or novel vs. more conservative, more artful vs. more functional). Castro is said to hire top-of-class young designers. Yet it does not elevate anyone as house designers by name, perhaps to encourage more collegiality and teamwork. An alternative approach would be to build a brand around a team of designers (like a “centre of excellence”) who share a certain vision and approach in fashion styles. Actually Castro already has three sub-brands: “Red” for casual dressing; “Blue” for more elegant, quasi-formal dressing; and “Black” for jeans wear. Castro can develop and enrich any of these sub-brands; create another brand with a specific style or tone of design as a secondary “specialisation” under any of those above; or build a new brand endorsed directly by the Castro name that will express new forms of art, novelty or elegance, etc. Whatever course taken, the leading idea is to give consumers a ‘name & face’ they can cling to, to follow how it evolves, and to identify with.

There are multiple avenues for Castro to reinvent and revive its brand and business as a whole. The expansion of its retailing activities may have led to the weakening of its fashion house and dilution of its brand. Some of the enterprises Castro acquired or merged with could hurt the brand to the extent that they are stopping Castro from developing answers in-house to gaps in the market. Therefore, it is perhaps the time now to return to increase the focus on Castro the fashion house as in earlier times, and let the retail arm serve it, not the other way round. Castro should be ready to enter its third period; the challenge will likely be assigned to the new Deputy CEO lately nominated, Ron Rotter (son of Etty and Gaby Rotter and former CFO), to reinvent Castro and put the brand on a new course.

Ron Ventura, Ph.D. (Marketing)

Additional Sources:

[A] “Michelle Gass Is Cracking the Code at Kohl’s”, Phil Wahba, Fortune (Europe Edition), December 2018, pp. 104-112.

[B] “Castro Once Was the Most Sexy Brand in Israel, But These Days Are Gone” (origin in Hebrew), TheMarker, 12 April 2019 (MarkerWeek edition), pp. 14-16

 

Read Full Post »

Online shopping in digital stores and shopping in brick-and-mortar stores offer different forms of experiences. It starts from the environment or setting in which the shopper is situated — being present in a 3D physical retail space or viewing a 2D screen of a computer or mobile device. It is the difference between how much and what specifically a shopper can see and absorb when looking around in a physical store compared with looking at a screen. The difference in setting may have a further impact on behaviour, like how shoppers find products and how they inspect them.

Imagine a shopper, Dan, entering a large fashion store. Dan’s head immediately turns around as much as 180 degrees scanning the scene. Just a few steps in front of Dan there is a low desk with shirts, and another desk with sweaters to the left; to the right Dan observes shirts hanging on a rectangle-shaped stand, and he notices how their designs differ from those on the desk; along the walls are more shirts and trousers, etc. Dan decides to approach first the shirts to the left because they have multiple colours, lifting one or two to look more closely at them; later he also turns to the wall to see trousers and tries to match them with shirts. As Dan’s shopping trip advances he may enter deeper into the store to check on some accessories or another variety of shirts. Very early in the visit the shopper can figure out what may be found in main sections of the scene. Then starts a sort of discovery tour that may be guided by a master goal but progresses as the shopper identifies relevant and visually attractive items (stimuli). The scene is ‘updated’ as the shopper goes deeper into the store, or into adjacent halls, and details that were more distant and vague before become sharper and clearer.

A different kind of shopping process usually occurs in online website stores: first of all because much fewer products (stimuli) can be observed in a relatively short glimpse of the screen-scene. The way merchandise in the online store is located and explored is much more gradual.  An online store actually encourages a more goal-driven search process (e.g., choosing names of categories from a menu, selecting attribute options to narrow down the search to a relevant selection of products). Then starts a back-and-forth process of exploration of different items (e.g., by clicking on item titles or images and entering product pages), and visiting additional major categories of products. However, the experience of search and exploration is so different: whereas in the physical store the shopper can ‘wash the eyes’ with shapes, designs and colours of products, and follow the eyes through the shopping trip, it is much harder to do so in an online store where one has to go step-by-step or in a piecemeal manner. Nevertheless, online shoppers have more flexibility and a wider span of possibilities for viewing product options simultaneously on the screen of a desktop or laptop computer than on the screen of a smartphone.

Certainly there are more clever and creative e-commerce or store websites that are able to generate an improved experience of exploration and inspection of products. For example, there are online stores that show grids composed of tiles of images representing major categories and sub-categories of products. The images are more lively, and some of them exhibit motion as well. With some images, hovering with a mouse on the product photo (before clicking) changes the angle in which a garment or handbag, for instance, is shown. On product pages, some options may be selected that immediately affect the product image (e.g., colours, dimensions, designs); products may be rotated dynamically or by selecting from a line of static thumbnail images under the main frame.

A large majority of shoppers enquire about products online before visiting a physical store. According to a Google/Ipsos survey (‘Omnichannel Holiday Study’, Nov. 2017-Jan. 2018), 78% of US holiday shoppers searched products before going into a store; the online search helps shoppers in planning their shopping trip to the store, narrow down the options they should be seeking at the store, but it also ‘inspires the purchase’ (thinkwithgoogle.com, October 2018). In another research by Publicis (‘Shopper First Retailing’, 2018), an even higher proportion of shoppers, 87%, report that they begin searches in digital channels (online, mobile), up from 71% in 2017 (RetailDive.com, 15 August 2018). Searching the Internet is regarded as a productive method to look for directions and learning about product options, as preparation for making purchase decisions. Shoppers do not feel obliged also to make the purchase online, even if they browse the e-commerce website of an online-only retailer (‘e-tailers’) or of a mixed retailer that operates both a website store and physical stores. Consumers like especially to consult reviews of peer users who have already had experience with products they consider.

This learning process seems functional and goal-driven where shoppers need some guidance to put order into their shopping journey. Online sources, including e-commerce websites, seem to provide an efficient solution for this purpose. The process may indeed inspire shoppers with ideas, perhaps to the extent of helping the shopper to focus on viable and worthwhile purchase options and avoid wandering too long clueless in a store. In such a case in particular, visiting the online store of a mixed retailer can prove most useful before arriving to one of its physical store locations — and this makes the website an even more effective tool for the retailer.

However, retailers that operate physical stores would not want shoppers to come too prepared with their minds pre-determined what to buy. While shoppers usually have a general plan of what they are looking for, final purchase decisions are still made mostly in-store. Hence it is so important for physical stores to be designed and arranged in an appealing and stimulating manner — to allow consumers to complete successfully their shopping trip in-store, and furthermore encourage and induce them to purchase a few more ‘treasures’ they discover in the store.

It may be relevant to consider here two scenarios:

For retailers that operate physical stores in multiple, even numerous locations, there should be a stronger incentive to leave their customers with enough reasons to conclude their shopping in-store rather than on the website store. Thus, the online store has to be visually attractive, user-friendly and informative, but it does not have to be fully equipped with features that convince customers to complete their shopping and purchasing online. The website should not go all the way in effort to draw shoppers from physical stores. Whereas the online store may provide more functional, productive experiences (e.g., efficient, time-saving), the physical store would be more capable in creating pleasant emotional experiences (e.g., excitement, thrill, joy). The positive emotions invoked should not be taken lightly because they drive purchases.

For e-tailers with no physical stores there should be greater need to invest in the quality and feel of experiences they can provide in their e-commerce websites. The introduction of shoppers to the online store should be more delightful as well as informative and user-friendly. Visual elements and interactive features have to be inviting and helpful in guiding the visitor into different sections of the store — on the ‘main stage’ of the screen estate and not just through the menu and search engine.

The latter applies, nonetheless, also to mixed retailers that have stores in just a few locations (e.g., major cities) and wish to reach much greater numbers of customers that do not have a store near them. It may also be relevant when targeting customer segments who for any reason have little time free to travel to a store, and in regions where shoppers are reluctant to go out during harsh weather conditions (e.g., steaming hot and dusty or freezing cold and snowy). [Note: Location data might be used to channel a reduced or enhanced version of a store website according to whether the user is in vicinity of a physical store by the retailer, a form of ‘geo-fencing’].

Delicatessen in Gstaad

The brick-and-mortar stores remain very much in demand. According to a Google/Ipsos online survey (‘Shopping Tracker’, US, April-June 2018), 61% of American shoppers prefer shopping with brands that also have physical stores than ones that are online only. Key benefits suggested for shopping in physical stores are the immediacy in which shoppers are likely to obtain the products they require; getting hands-on — seeing and interacting with products before buying; and being more fun than shopping online (35% feel so) (thinkwithgoogle.com, John McAteer, November 2018). The Publicis study indicates more generally that 46% of shoppers prefer to buy in physical stores (vis-à-vis 35% who prefer shopping using their laptops and 18% on mobile phones) (RetailDive). Apparently, shoppers are not blind to benefits and advantages of shopping in physical stores over online stores, and many are not ready to leave them to fade out.

It is not suggested that online stores necessarily have to be made to appear like physical stores on the screen — mimicking the scene of a brick-and-mortar store may be perceived as just artificial, awkward and inconvenient (though retailers who also have physical locations can integrate actual store images into relevant sections of the online store). On the one hand, the retailer (or e-tailer) should take advantage of the strengths of the digital medium in organising, displaying and tracing information in the online store. On the other hand, online stores may have to breakaway in some degree from rigid structures of tables, lists and matrices. Grids of image tiles make a good start. Yet, more versatile visualisation possibilities have to be considered to provide visitors of store websites (or mobile apps) a more stimulating presentation of the variety of products the store has to offer. The interactive presentation should expose visitors to an array of products available (e.g., by type, use purpose, or brand), and lead their way from there into sub-categories and specific product models or brands.

  • Virtual Reality (VR) technology may be used to emulate a view of a store in 3D space, but the equipment needed to create a truly compelling experience is not in reach of most consumers, at least not yet. The more crucial question is: why should consumers prefer an imitation or illusion when almost everyone can visit real physical stores and shops. At least one aspect VR is unlikely to provide adequately is the social experience.

Instead of treating online shopping and shopping in physical stores as substitutes competing with each other, the more sensible approach for mixed retailers is to create ways in which they can combine and complement each other. The connection can be a two-way street, especially given that shoppers use mobile devices more frequently during store visits (71% of shoppers according to Publicis study cited by RetailDive). From online to store, for example, a mobile app of the retailer used in-store can help the shopper navigate and find the way to the places of products that he or she detected and learned about in a preliminary search and study online (e.g., Home Depot). From in-store to online, the shopper may use the app of the retailer in-store to find more information about products found in the store by scanning a barcode for the product of interest (e.g., Sephora [cosmetics] allows access to product reviews, order history of the shopper, and more) [examples adopted from McAteer in thinkwithgoogle]. More technologies that help in bridging between the virtual and physical domains of shopping include beacons and augmented reality (AR).

  • There are other areas not covered above in which online shopping is distinguished from in-store shopping and require more attention, such as customer service, specifically providing advice and assistance to shoppers, and the fulfillment of orders (a ‘click-and-collect’ programme is another way of linking the physical and online stores).

The physical and digital (virtual) domains have each their strengths in creating different forms of shopping experiences. Physical stores and shops have built-in advantages in evoking emotional experiences while shopping — they are tangible and more direct, can provide good personal care, and may attract and excite shoppers by means of interior design and visual merchandising in their physical spaces. Furthermore, beyond vision, physical stores allow shoppers to enact other senses (e.g., touch, smell) that cannot be experienced in the digital domain. It is unsure how much a store website (or app) can give rise to a similar emotional experience and attachment in shoppers, yet there are aspects that can be borrowed into the digital domain that would make it seem not just functional but also more appealing and immersive. Nonetheless, mixed retailers may have the best opportunity to combine the strengths from the physical and digital domains and link them to produce shopping experiences that are more productive and enjoyable altogether.

Ron Ventura, Ph.D. (Marketing)

 

Read Full Post »

One does not have to be a faithful Christian to enjoy a good Christmas market, and the Swiss markets in Zürich during the Advent period (22 November – 23 December) are very good indeed. Truly, those markets are useful and delightful for non-Christians just as well. As a market, it is a commercial event at its core. But much beyond its commercial function, the Christmas market has the flare of a festive fair, and this is well felt in Zürich.

Remarkably, the Christmas markets of Zurich do not have the appearance and feel of an over-commercialised event. A careful observer may find signs of event marketing and brand marketing, but they are woven cleverly and tastefully into the market happening so it should not disturb the visitors. Big brand names are not omnipresent or dominating the markets. Instead, stalls seem to be inhabited mostly by small and independent local traders, and much of the merchandise is made by handicraft. The magic of this organisation is in giving the sense of older-times retailing. These characteristics may signify, more broadly, a distinction between European and American approaches to commerce and marketing. Nevertheless, the Zurich Christmas markets seem to exhibit elements of a well-thought marketing design, yet without making them imposing or too apparent to celebrating visitors-shoppers.

Just to remove any doubt before continuing: These markets involve not only merchandise — food and drinks play a major role in them. More will be said about eating and drinking at a Christmas market later in the post.

Several Christmas markets operated this year (2018) in Zurich, the three major ones were in the main railway station (Hauptbahnhof); in front of the Opera House near the lake; and in the Niederdorf Quarter in the Old Town of Zurich (on the north bank of the Limmat river).

The Christkindlimarkt in the large hall of the Hauptbahnhof (i.e., it is located indoors) is the most immediately accessible to anyone arriving to Zurich by train. But furthermore the station is a major hub of travel and shopping for anyone passing through (note: the station lays over a large underground shopping centre). It is the central market of the city with 150 stalls. The Christmas market in the station is therefore said to be the most busy one in the city, and it can feel over-crowded at times.

The market is arranged in a squared block with two longitudinal ‘avenues’ running Swarovski Christmas Treethrough it with stalls on both sides, and some passes connecting between them. In the middle of the market features the main attraction: a 15-metre-high sparkling Christmas tree with glass decorations, courtesy of Swarovski. The tree is surrounded at its base by displays of glassware jewelleries, figurines and other decorations by the Swarovski retail brand, with a little hut-shop next to the tree (a Swarovski store is situated across the street from the railway station). The tree makes a very impressive attraction, nevertheless, and lures many visitors circling around it. Overall, the market looks and sounds cheerful and busy, and while the Swarovski-branded tree acts as a market’s anchor, it does not seem to distract visitors-shoppers from attending the many stalls in the Christkindlimarkt with their various gift-opportunity offerings and food delights.

A greater festivity takes place, nonetheless, at the Christmas village (‘Wienachstdorf’) in the large square in front of the Opera House (Sechselautenplatz) just next to the Zurich Lake promenade. This Christmas market-village entails around 100 stalls, arranged in free-form, curve-shaped areas. Not least, it seems to offer the best opportunities for Christmas Market Village near Operaeating and drinking in between looking for merchandise. A large place is dedicated in the centre of the village for sitting at long tables to eat some of the delicacies like Swiss raclette or a French crêpe. Since this market is open-air, and it can be freezing cold, a most popular hot drink at this time of year is Glühwein (mulled wine) — many people can be seen walking and warming up with cups of Glühwein. There are, however, some more protected areas to stay, eat or drink, particularly two indoors halls that resemble pubs in atmosphere. The market is plentiful with merchandise at the stalls, so much it is impossible to cover here its variety.  Most products can fit appropriately as gifts for family and friends, but they also suit shoppers wishing to spoil themselves for Christmas. One may find there winter accessories, decorations and toys of all sorts, woodcraft, and much more.

Two main attractions are especially noteworthy; each is of a different type, and either is hosted by an Alpine mountain resort site. The major leisure attraction is an ice skating rink, hosted by Arosa mountain resort (neighbouring Lenzerheide in the Graubünden Canton). Little children are welcome to join skating with the aid of ‘penguins’. Traditional Christmas songs (as back in time as from the 1940s) play in the background to complete the nice entertaining experience. A culinary attraction on site of the Christmas village is the Fondue Chalet hosted by Klosters, the Klosters Stübli (Klosters is a resort village neighbouring the more famed town of Davos). Inside the chalet, diners are seated at long wooden tables on benches with woolen covers, giving the place the atmosphere of a public dining house. Having a fine cheese fondue with a glass of cider makes a wonderful meal. True, the two resort sites make a promotion for themselves ahead of the winter vacation & skiing season, but in view of the pleasant benefits they provide to the visitors of the Zurich Christmas market, such a branded initiative appears legitimate and welcome. They fit well as event marketing attractions in the Wienachstdorf that add to the whole festive atmosphere, like one big street party.

The third key Christmas market is in the Niederdorf Quarter of the Old Town. It is centred at Niederdorfstrasse, but it has ‘satellite’ extensions along the streets, starting from the large cathedral of Gross Münster. The headline advantage of this market is the relaxing atmosphere that the Old Town architecture provides. It is relatively smaller as well as calmer than the two previous markets described.

Smaller concentrations of Christmas market stalls can be found in another part of the city centre, along and around the Bahnhofstrasse. One concentration, for instance, can be found in a pedestrian street running between the Jelmoli aChristmas Market near Globusnd Globus department stores, and continuing in front of the latter. It adds light and buzz to that area that is not available in other times of the year. Another Christmas market happening takes place not far from there, at Werdmühleplatz, next to the main shopping and business Bahnhofstrasse. There beside the stalls stands a large Singing Christmas Tree; in the evenings different choirs from the Zurich district stand on elevations around the tree and sing Christmas songs in various languages to the pleasure of a pedestrian audience. This gives a special celebrating atmosphere to the small market.

To complete the picture, add to the Christmas markets the sights of Christmas lights in different decorative forms and colours, hanging above streets and on the facades of buildings, especially those housing large stores, banks, and other prominent businesses. The Christmas lights will follow shoppers most of the way moving from one market to the other. A special tram for children runs between sites in the city in a round tour starting nearby the Wienachstdorf; the children are hosted by Christmas angles (Christkindli) on their trip, sponsored by Jelmoli department store.

A Stall in Christmas Market near Globus

It must be emphasised that stalls selling food and drinks are available for visitors-shoppers in each of the Christmas markets, including serving the Glühwein, a necessity when temperatures drop to zero degrees Celsius. Similar food delicacies may be found in most of the markets (e.g., raclette, sausages, crêpes, Berliner, mini mousses), yet the market in front of the Opera seems to be the culinary centre with a greater variety of foods (e.g., including also Asian cuisine). Lines may be found in front of every food stall at the Wienachstdorf, and the tables in the village centre are almost always fully occupied.


Notwithstanding the markets in Zurich, an experience of an even greater Christmas market is awaiting those willing to go farther along the Lake of Zurich (less than an hour journey by train) to Rapperswil-Jona, its lakeshore promenade and the Old Town. The Christkindlimärt spreads over the large place of the promenade and extends into theChristmas Market in Rapperswil-Jona streets of the Old Town going up to the castle. The market inhabits over 200 stalls of nearly anything one can ask for in gift merchandise for the holidays, foods and drinks. Notably, more handcrafted artifacts appear to be available in this market than in the city. Overall, there seems to be much greater variety of products in this market, if you include stalls on the promenade and within the town. Additionally, one may find there food produce to buy for home (e.g., varieties of cheese, salami). Musical performances are playing from a stage in the promenade to make the celebration merrier. As a note aside, no conspicuous brand marketing could be readily traced in this event, except perhaps for the event marketing of the whole market. In summary, the Christkindlimärt of Rapperswil-Jona offers a special and rich experience that feels more free, like a holiday in the countryside, to anyone willing to make the modest distance.


 

The Christmas markets of Zurich, as described above, are well organised and designed to create festive events — the markets are both commercial events and celebrating events for the seasonal holidays. There is a flourishing shopping activity that visitors are engaged in, but it is enveloped with leisure, culinary and entertainment activities and experiences. Visitors walking through the markets can mix between all these possibilities to create each his or her favourable experience. The style of these markets, not unexpectedly, is orientated more towards the traditional marketing and retailing rather than modern design. But it has to be well planned in our days to sustain those earlier characteristics. In that sense, the markets appear to manifest good practices of event marketing. The city of Zurich can be complimented for creating attractive festive markets for residents as well as tourists.

Ron Ventura, Ph.D. (Marketing)

 

 

Read Full Post »

Marketing and consumer researchers have long been interested in revealing and describing differences in the behaviour of consumers that arise from differences in culture between societies, nations and communities. Ignoring such differences can lead companies to making embarrassing and costly mistakes in international marketing. Culture sets ideas, values, norms, symbols and customs that influence and shape the thoughts, beliefs and actions of the people adhering to it; in particular, responses to marketing-oriented stimuli — products, advertising messages, websites, stores etc. — can vary specifically due to cross-cultural differences.

Kastanakis and Voyer (2014 [1]) propose that investigation of the effects of cross-cultural differences on consumer behaviour should look deeper into pre-behavioural processes, namely perception and cognition. Culture conditions perception and cognition, thus affecting how consumers perceive and understand stimuli, which consequently drive behaviour. Consumers develop perceptions and thoughts from the input of stimuli they attend to, but top-down processes set by pre-defined mind-sets, goals and beliefs (e.g., guided by culture) may inversely shape how consumers perceive, interpret and think of the information received from their environment. The researchers review ways in which culture influences perception and cognition in different functions or contexts. Similar to the greater part of research on cross-cultural differences, Kastanakis and Voyer concentrate on differences between Western cultures (individualist, espousing independence) and Eastern [Asian] cultures (collectivist, espousing interdependence).

Western cultures encourage people to see themselves by themselves, that is, developing an independent construal of one’s self-image; Eastern cultures on the other hand encourage people to see themselves as part of a group, that is, developing an interdependent self-construal. Thus, Easterners are predisposed to construe their self-image based on their relations with and similarities to others in a group of affiliation, compared with Westerners who view themselves as individuals independent from others, emphasising their unique traits. The tendency of Easterners to perceive and judge an individual person relative to surrounding others is demonstrated in this example cited by Kastanakis and Voyer: American and Japanese research participants were asked to judge the emotion of a central figure based on his or her facial expression when surrounded by other person figures showing the same or different expressions — “The findings indicate that the surrounding people’s emotions influenced Japanese perceptions but not Americans’ perceptions of the central person’s feelings.” [Based on research by Masuda, Ellsworth and others, 2008.] Contextual information (e.g., feelings of others) seems to matter for judgements in the East more than in the West.

In another implication of the independent-interdependent cleavage, whereas Westerners are mainly focused on achieving their personal goals, Easterners are looking more to help advance goals of the group they belong to, catering to others’ needs or wishes.  The authors suggest as a possible consequence that “Westerners perhaps tend to join groups to serve their own needs, whereas in collectivist societies, people serve the groups to which they belong”. This difference in approach may affect, for example, the way users of social media in North America and Europe participate and interact in these networks, differently from users in Asia (e.g., South Korea, Japan, China). It has been repeatedly argued that social media networks have not helped people in the West to socialise any better, perhaps even to the opposite, and that users engaged in social media may still feel in solitary. A similar discussion may concern also the use of digital platforms in the rising ‘sharing economy’ (e.g., Airbnb, Uber, LendingClub). Gaining true benefits from socialising and sharing platforms is based on collaboration, contributing to others or at least reciprocating helpful actions by others, not quite in line with values and norms taught by the individualist culture of the West (e.g., promoting competition and personal achievement).

The contrast between independence and interdependence further finds an expression in a respective distinction between thinking styles: analytic vs. holistic. Analytic thinking, associated with an individualist culture, is more focused on single objects and the attributes of each; holistic thinking, associated with a collectivist culture, is more attentive to the context or field in which any object is found. Thereby, Westerners following an analytic perspective would be more inclined to observe and judge objects in isolation, whereas Easterners (Asians) following a holistic perspective tend to consider the relations between objects observed and make judgements based on the context of a whole scene. This distinction can have important implications for the perception and evaluation of visual scenes. For instance, a Westerner would focus on a particular exhibit or display of products in a store (e.g., a dressed mannequin) while an Easterner would see the same display against the background of other in-store displays and interior decorations of the store. In front of a shelf display, an Easterner viewing it holistically would be more attentive to the collection of products on display compared with an ‘analytic’ Westerner focusing on each product at a time (note: such a difference may also be applicable to a screen display of products on a webpage).

The difference in perspective is applicable also in viewing photographs of scenes, not just when being physically present on-site. Easterners more accustomed to a holistic view would be more capable at capturing the gist of a photographed scene as it relies on perceiving relations between multiple figures and objects in the scene. Westerners following an analytic perspective, on the other hand, would be more capable at noticing the attributes of particular objects. It should be noted, therefore, that while people in the collectivist East may have the advantage of identifying relations better, people in the individualist West may have the advantage of observing object details better (i.e., could be judging single objects with greater scrutiny). It furthermore appears that people match their aesthetic preferences to their culture-orientated perspective. Kastanakis and Voyer give an example wherein Eastern portrait paintings or photographs “tend to diminish both the size and the salience of the central figure and emphasize the field”.  Such differences in perspective and thinking style should be considered, as the authors advise, in the aesthetic design of advertising materials and other communications as well as in retail sites.

Stronger relational processing has relevance to attributes, and moreover to a perceived relationship between price and physical product attributes used as intrinsic cues for quality. Lalwani and Shavitt (2013) provided ground support for the association between modes of self-construal — independent vs. interdependent — and reliance on a perceived price-quality relationship. The way people look upon their own self-concept vis-à-vis their relation to others radiates to their perceptions and processing of relations between price and quality attributes. Importantly, however, they show that the linkage is mediated by the distinction between analytic and holistic thinking styles. Interdependent (collectivist-oriented) consumers are more capable at processing price-quality relations, where holistic thinking in particular positively predicts greater reliance on such relationships [2].

In addition to visual processing and aesthetics, culture is known to affect perception, processing and preferences of smell and sound. Consumers may be biased to better recognise smells familiar to them in their culture or to better comprehend culturally familiar melodies. The bias occurs, as said by Kastanakis and Voyer, during recall and recognition before the information even enters the attitude formation, judgement, and decision making processes. Consider thereby the mixtures of styles and forms one would find in a country that absorbs immigrants originating from cultures different from each other or from the culture incumbent in the receiving country, for example in music and food. As people borrow from the traditions of communities of other cultural origins and adopt also from those typical locally, they get exposed to and experience mixtures of music melodies or food flavours. Yet, even with years passing certain things do not change — consumers may continue to feel more secure and comfortable with the familiar music genres and food styles they were raised on at home, associated with a given culture.

  • Kastankis and Voyer note a lack in cross-cultural research on taste perceptions; that is unfortunate because food is such a significant domain, but the smell of food may still have a cultural impact on consumers’ reactions.

Furthermore, the language one speaks can determine the perspective, individualist or collectivist, one applies. Immigrants, for instance, may change how they present themselves depending on the language they use: that of their origin or the one adopted in their current country of residence. The language carries the values and norms of a culture it is associated with, such as how people perceive themselves. For example, bi-cultural Chinese-born people refer to their own internal traits and attributes to describe themselves in English but describe themselves in relation to others when using Chinese. Kastanakis and Voyer argue that language is not emphasised enough as an aspect of culture: “language triggers a culture-bound representation of the self”.


Idiocentrism and Allocentrism are views held by people at the individual level in parallel to the individualist and collectivist cultural views of societies, respectively. This reference to individual-level culturally oriented views becomes particularly prominent when the personal view does not match the societal-level view dominant in one’s country of residence: for example, when people of Asian origin living in the United States, a country with an individualist culture, personally maintain an allocentric view.

Dutta-Bergman and Wells (2003) found some interesting differences in values held and lifestyles practised by idiocentrics and allocentrics living in the American individualist culture. For example, idiocentrics are likely to be more satisfied with their financial situation and optimistic than allocentrics; idiocentrics are also more disposed to be workaholic, yet are more innovative. Allocentrics are more likely to be health conscious; additionally, they are more inclined to invest in food preparation and other chores at home and to engage in group socialising than idiocentrics [3]. (Note: Idiocentrism and Allocentrism are approached as individual-level dispositions adopted by people; they are not necessarily contingent on any immigration status or country-of-origin.)


 

The differences between individualist and collectivist cultures may influence human cognition in several more ways explained by Kastanakis and Voyer. Key areas involve self- versus others-related cognitions, self-esteem, and information processing. Briefly mentioning some noteworthy implications: (1) People in Western cultures have a stronger tendency to make dispositional attributions for behaviour (e.g., to one’s personal traits or competencies) and discard situational factors, as opposed to Easterners; (2) Causal reasoning in Eastern cultures tends to give greater consideration to interactions between personal (dispositional) factors and situational or contextual factors than in Western cultures; (3) In Western cultures people will prefer to classify products based on typical functional or physical attributes of categories (i.e., rule-based classification) whereas in Eastern cultures people will rely more on family resemblance and relationships between products (i.e., relational classification); (4) In persuasion, Westerners (e.g., Americans) prefer to take side in conflicts while Easterners (e.g., Chinese) are persuaded more by compromise solutions and are more ready to deal with contradictions.

Readers are reminded additionally of the differences in processing of visual information already described earlier (i.e., between the Western object-focused analytic approach and the context-orientated holistic approach in the East). These differences may be well-connected with the approach consumers take in judging and classifying products visually displayed (e.g., physically in-store, virtually in print or screen images).

Three final comments to conclude: First, as always we have to be careful with generalisations made such as between ‘Western culture’ and ‘Eastern culture’. There are differences in elements of culture between countries associated more closely with either the individualist or collectivist streams of culture. There is furthermore variation among communities and sectors within countries, and some tendencies may also be considered as individual-level differences (e.g., holistic vs. analytic thinking). Second, there is need in the West to explore and deepen the understanding of other streams of culture (e.g., African, Middle Eastern, South American). Third, Kastankis and Voyer address changes in perspective and behaviour of people in Asian nations caused by their growing exposure to the Western individualist cultural orientation. However, a more salient phenomenon prevalent in recent decades seems to be the immigration of people originating from non-Western cultures coming to live in countries of the West. Especially in Europe, the extent of exchange in ideas, values and customs between people with Western-orientation (‘incumbents’) and non-Western cultural orientations (e.g., from Africa and the Middle East) should have great impact on the balance between cultures on the continent (as well as in the UK), and not least the kind of consumer culture that will prevail in future.

International marketers must keep fully aware of and account for the differences between Western individualist orientation and Eastern collectivist orientation, and more so their multiple facets of manifestation in perception and cognition. Particularly important is paying attention to the differing thinking styles (i.e., analytic vs. holistic thinking) for their possible implications in processing and responding, for example, to persuasive attempts in advertising in online and offline channels, store design and visual merchandising. Extending marketing plans or initiatives across seas and borders, without making consideration for these potential differences, may significantly diminish the effectiveness of the actions taken in new destination markets to the extent of proving utterly precarious.

Ron Ventura, Ph.D. (Marketing)

References:

[1] The Effect of Culture on Perception and Cognition: A Conceptual Framework; Minas N. Kastanakis and Benjamin G. Voyer, 2014; Journal of Business Research, 67 (4), pp. 425-433. (Accepted version is available at eprints.lse.ac.uk/50048/ on LSE Research Online website).

[2] You Get What You Pay For? Self-Construal Influences Price-Quality Judgments; Ashok K. Lalwani and Sharon Shavitt, 2013; Journal of Consumer Research, 40 (August), pp. 255-267 (DOI: 10.1086/670034).

[3] The Values and Lifestyles of Idiocentrics and Allocentrics in an Individualist Culture: A Descriptive Approach; Mohan J. Dutta-Bergman and William D. Wells, 2002; Journal of Consumer Psychology, 12 (3), pp. 231-242.

 

 

Read Full Post »

Consumer purchases from Internet retailing websites continue to expand, and their share out of total retail sales increases. Yet there is no real reason to declare the demise of physical, bricks-and-mortar stores and shops any time soon. Online purchases from e-stores (including through apps) indeed pose a stressing challenge to many physical stores, but the latter still hold a solid and dominant majority share of retail sales. Nonetheless, owners of physical stores will have to make changes to their mission and approach to retailing in order to answer effectively and successfully to the challenges from electronic retailing (‘e-tailing’).

The share of sales revenues from online retailing varies across categories (e.g., from groceries to electronics) yet the share overall out of total retailing revenues still floats around 12%-15% on average; there is also important variation between countries. Tensions are high particularly because of the threat from overarching e-tailers such as Amazon and Alibaba who grew their businesses in the virtual online environment. However, retailers do not have to choose to be either in the physical domain or the virtual domain: Many large and even medium bricks-and-mortar retailers are already double-operating through their physical stores and the Internet and mobile channels. Moreover, the master of Western e-tailing Amazon is lurking into the physical world with the establishment of its Amazon Go food stores, its venture into physical bookstores in selected US locations, and notably the acquisition of the food retail chain Whole Foods — what better testimony of the recognition that physical stores are still in need. All these observations should tell us that: (1) The lines between physical and virtual (electronic) retailing are blurred and the domains are not exclusive of each other; (2) It is a matter of linking between the domains where one can operate as an extension of the other (and it does not depend on which is the domain of origin); and (3) The domains are linked primarily by importing technology powered with data into the physical store’s space.

Technology alone, however, is not enough to resolve the challenges facing physical stores. Focusing on technology is like harnessing the carriage before the horses. The true and crucial question is: What will consumers of the coming future be looking for in stores? This is important, because consumers, especially the younger generations born after 1980, still have interest in shopping in bricks-and-mortar stores but they could be looking for something different from past decades, moreover given the digital options available to them now. The answers will have to come through rethinking and modifying the mission and strategy set for physical stores. The direction that seems most compelling for the mission is to shift emphasis from the merchandise offered in a store to the kind of experience offered in the store. The strategy may involve reconsideration and new planning of: (a) the product variety and volume of merchandise made available in the store; (b) interior design and visual merchandising; (c) scope and quality of service; and (d) the technologies applied in the store, all tailored to the convenience and pleasure of the shoppers.

This article will focus primarily on aspects of design of stores, including  interior design and decoration, layout, and visual merchandising (i.e., visual display of products); together with additional sensory elements (e.g., lighting, music, texture, scent) they shape the atmosphere in the store or shop. Yet it should be noted that the four strategy components suggested above are tied and influence each other in creating the kind of experience a retailer desires the customers-shoppers to have while in-store.

Shopping experiences in a store rely essentially on the emotions the store invokes in the consumers-shoppers. Notwithstanding the sensorial and cognitive reactions of shoppers to the interior scene of the store, the positive and pleasant emotions the shoppers feel will most likely be those that motivate them to stay longer and choose more products to purchase (further desired behaviours may include recommendation to friends and posting photos from the store on social media). Prior and close enough to consumption itself, the personal shopping and purchasing experience may invoke a range of positive emotions such as joy, optimism, love (non-romantic), peacefulness, and surprise; of course there also are potential negative emotions that retailers would wish to reduce (e.g., anger, worry, sadness)[*].

The need for shift in emphasis in physical stores is well stated by Lara Marrero, a strategy director with Gensler, a British design firm: “It used to be a place where people bought stuff. Now it is a state where a person experiences a brand and its offerings”. Marrero, who is leading the area of global retail practice at the firm, predicts a future change in mentality of shoppers from ‘grab and go’ to ‘play and stay’ (“Retail 2018: Trends and Predictions”, Retail Focus, 15 December 2017). This predicted shift is still inconsistent with a current retail interpretation of linking the digital and physical domains through schemes of ‘click-and-collect’ online orders at a physical store. Additionally, consumers nowadays conduct more research online on products they are interested in before coming to a store: The question is if a retailer should satisfy with letting the consumer just ask for his or her preferred product at the store or encourage the consumer-shopper to engage and interact more in-store, whether with assistance from human staff or digital utilities, before making a purchase — the push may have to come first from the consumers. Marrero further notes the social function of stores: retail environments become a physical meeting point for consumers to share brand experiences. Retailers will have to allow sufficient space for this in the store.

In order to generate new forms of shopper experiences the setting of a store’s scene also has to change and adapt to the kind of experience one seeks to create. New styles and patterns of in-store design are revealed through photo images of retail design projects, and the stories the images accompany, on websites of design magazines (e.g., VMSD of the US, Retail Focus of the UK). They demonstrate changes in the designing approach to the interior environment of stores and shops.

A striking aspect in numerous design exemplars is the tendency to create more spacious store scenes. It does not necessarily mean that the area of stores is larger but that the store’s layout and furnishing are organised to make it feel more spacious,  for example by making it look lighter and allowing shoppers to move more easily around. Additionally, it implies ‘loading’ the store’s areas which are accessible to customers with less merchandise. First, merchandise would be displayed mostly on fixtures attached to walls around the perimeters of the store, but even then it should not look too crowded (i.e., in appreciation that oftentimes ‘less is more’ for consumers). Second, fewer desks and other display fixtures are positioned across the floor to leave enough room for shoppers to walk around conveniently (and possibly feel more ‘free’). In fashion stores, for instance, this would also apply to  ‘isles’ of demonstrated dressing displays. Third, desks should not be packed with merchandise, and furthermore, at least one desk should be left free from merchandise — leave enough surface for shoppers and sellers to present and look at merchandise and to converse about the options. In some cases, it may allow for the shoppers to socialise and consult among themselves around a desk at the store (e.g., inspired by Apple stores). Opportunities to socialise can be enhanced in larger stores  by allocating space for a coffee & wine bar, for instance, which may serve also sandwiches, patisseries and additional drinks. Stores would be designed to look and feel more pleasant and enjoyable for consumers-shoppers to hang around, contemplate their options and make purchase decisions.

  • Large stores that spread over multiple floors with facades turning outwards to the street may fix the facades with glass sheets, and in order not to block natural daylight from entering into the store they would place desks and mobile hangers or other low shelf fixtures along the windows.

Modissa Fashion Store set for Christmas

In the new-era store not all merchandise the store may offer to sell needs to be displayed in the ‘selling areas’ accessible to shoppers. Retailers may have to retreat from the decades long paradigm that everything on display is the inventory, and vice versa. It is worth considering: First, some merchandise can be displayed as video on screens, and thus also add to the ‘show’ in the store; Second, shoppers can use digital catalogues in the store to find items currently not on display — such items may still be available in stock on premises or they may be ordered within 24 hours. But furthermore, customers may be able to coordinate online or through an app with a store near them to see certain products at a set time; up-to-date analyses of page visits and sales on a retailer’s online store can tell what products are most popular, subsequently guaranteeing that the physical stores keep extra items of them in stock on premises.

Here are references to a few exemplars for illustration of actual store design projects published in design magazines’ websites:

Burberry, London — The flagship store of luxury fashion brand Burberry on Regent Street is highlighted for both the use of space in its design and the employment of digital technology in the store. A large open space atrium (of an older time theatre) occupies the centre of the store (four floors, 3000 sqm), impressive in how Burberry allowed to keep it. The digitally integrated store is commended for its fusion of a ‘digital world’ into its bricks-and-mortar environment: a large high-resolution screen plays video in the atrium, synchronised with a hundred digital screens around the store, some 160 iPads (e.g., for finding items on the catalogue that may not be on display), and RFID tags attached to garments (VMSD, 18 December 2012).

Hogan, Milano — The footwear ’boutique’ store (277 sqm in via Montenapoleone) is designed to reflect the brand, “luxury but accessible”. The store’s mission has been described as follows: “Hogan is a lifestyle brand, championing contemporary culture. The store therefore needed to be dynamic, working hard to adapt from retail space to live event or gallery space”. Characteristic of the store: tilted surfaces for display, lying on top of each other like fallen-down domino bricks; and an animated display of patterns by LED lighting behind frosted glass walls — they both reflect movement, the former just symbolically while the latter more dynamically, to “express the dynamism of the city”. The store of Hogan also fosters social activity around its host bar and customization bar (Retail Focus, 15 February 2018).

Black by Dixon’s, Birmingham (UK) — The technology retail concept aspires to make “the geeky more stylish and exciting”. Digital technology is “dressed” in fashionable design, aiming at the more sophisticated Apple-generation (distinctive in the images are the mannequins “sitting” on desks as props, and colour contrasts on a dark background). (VMSD, 24 May 2011.)

Stella McCartney, Old Bond Street, London — The re-established flagship store resides in an 18th century historic-listed building (four floors, 700 sqm). Products such as dresses and handbags are displayed (sampled) across the store in different halls. The design and lighting give a very loose feeling. Refreshingly, the ground floor features an exhibit of black limestones and “carefully selected rocks” from the family’s estate, a piece of nature in-store (Retail Focus, 14 June 2018).

Admittedly, some of the more distinctive and impressive design exemplars belong to up-scale and luxury stores, but they do give direction and ideas for creating different experiences in retail spaces, even if less lavishly. Furthermore, technology can enrich the store and add a dimension of activity in it. Yet it is part of the whole design plan, not necessarily its central pillar, if at all.

Installing digital technology in a store does not mean importing the Internet and e-store into the physical store. Features of digital technology can be employed in-store in a number of ways, and the use of an online catalogue is just one of them. There is no wisdom for the physical store in trying to mimic Internet websites or compete with them. It should find ways, instead, to implement digital technologies that best suit the store’s space and transform the experience of its visiting shoppers.

Moreover, the store owner should identify those aspects that are lacking in the virtual online store and leverage them in the bricks-and-mortar store (e.g., immediacy, non inter-mediated interaction with products, sensorial stimulations other than visual and audio, feeling fun or relaxed). Thereof, the store should borrow certain technological amenities that can help to link between the domains and make the experience in-store more familiar, convenient, interesting, entertaining or exciting. According to an opinion article in Retail Focus on “The Future of High Street” (Lyndsey Dennis, 25 April 2018): “To draw customers back to brick-and-mortar, [retailers] need to rethink how they use their physical space and store formats. The key is to give customers something they can’t get online, whether that’s information, entertainment, or service“. Advanced technologies such as Virtual reality (VR) and Augmented Reality (AR) are part of the repertoire that are increasingly introduced in high street stores [e.g., AR applied in the fitting rooms of Burberry’s store, triggered by the RFID tags].

Matt Alderton, writing in ArchDaily magazine of architecture and design (25 November 2015), details key technologies and how they are implemented in stores to create new possibilities and leverage shopper experiences. One group of technologies can provide vital data to retailers which in turn can be applied to interact with shoppers and return useful information to them (e.g., beacons, RFID tags, visual lighting communications). The second group includes display technologies that may be enriching with information and entertaining to shoppers: for example, VR and AR, touch screens, and media projected on a surface such as table-top which thus becomes a touch screen. Alderton clearly sees consumer need for physical stores, the question is how consumers would want them: “What the data says is that shoppers want to move forward by going back: Like their forebears who visited Harrods, they crave emporiums that are experiential, not transactional, in nature“. (See also images in this article as they portray new-fashioned designs in space and layout; notably these stores feel less crowded by merchandise, and some show in-store digital displays.)

These are challenging times for bricks-and-mortar stores. New possibilities are emerging for physical stores to grow and thrive, yet they will have to adapt to changed shopping and purchasing patterns of consumers and develop new kinds of experiences that appeal to them. It should be a combined effort, with contribution from interior design of stores and visual merchandising, utilities and amenities based on digital technologies implemented in the store, and the support and assistance by human personnel. The in-store design is especially important in setting the scene — in appearance, comfort and appeal — that will shape shoppers’ experiences. Retailing could evolve as far as into new forms of ‘experiential shopping’.

Ron Ventura, Ph.D. (Marketing)

Reference: [*] Measuring Emotions in the Consumption Experience; Marsha L. Richins, 1997; Journal of Consumer Research, Vol. 24 (September), pp. 127-149.

Read Full Post »

Ordinarily, Great Britain is not the first country to come to mind when thinking of chocolate. The names of Switzerland and Belgium are more likely to come up first, and then perhaps some other European countries (e.g., France, Italy, Germany, Austria). However, the British upmarket chocolatier Hotel Chocolat may deeply change our perception of Britain in association with chocolate; that is, following of course consumers’ pleasurable associations with the brand Hotel Chocolat. The brand name identifies both the company and its products (i.e., it is a ‘branded house’ of chocolate). Moreover, the company is a manufacturer as well as a retailer, offline and online, of chocolate products of multiple sorts, all under an encompassing brand, Hotel Chocolat.

Britain has been known for chocolate from companies like Cadbury and Thornton. But their products did not really succeed in raising an equivalent alternative that challenges the quality of chocolate from the better known ‘chocolate nations’. Cadbury in particular is most probably the main source for perceptions of British chocolate generated by consumers; in some of its products Cadbury blurs the distinction between true chocolate and chocolate snacks or confectionary. In 2010 the American company Kraft Foods took over Cadbury in an unfriendly maneuver; yet Kraft had a problem in swallowing the business of the acquired British company and just a year later split all of its confectionary arm including Cadbury to a new spin-off company called Mondelez International. Thornton’s already set a standard of higher quality chocolate delicacies in forms like bars and pralines. It also developed a chain of chocolate delicacy and gift shops. However, the enterprise expansion eventually ran into trouble and in 2015 the brand was acquired by the Italian giant Ferrero (well-known for ‘Ferrero Rocher’, also owner of Nutella).

Hotel Chocolat seems to be different, not merely for its positioning as an upmarket brand but in virtue of the fine feel and taste of its chocolate products — one immediately knows it is different when tasting one of the brand’s chocolate products. Drinking their hot chocolate with cocoa-flavoured cream makes a fitting complement to the pleasure of eating the solid chocolate delicacies. The experience of visiting a boutique shop of Hotel Chocolat (e.g., in Covent Garden in London, in the basement) also is an important contributor to conquering committed chocolate lovers.

Appetising Selection of Chocolates at Hotel Chocolat

Tempting chocolates displayed in cave basement of Hotel Chocolat’s Covent Garden shop

 

Hotel Chocolat was co-founded by Angus Thirlwell, CEO of the company, and Peter Harris (Development Director). In an earlier stage of their chocolate business, the co-founders established a company named ‘Express Choc’ as an online retailer of chocolates in 1993 (no doubt an early venture in e-commerce). They opened their first physical shop in the north of London in 2004 after changing the business name — this event practically marks the initiation of the brand Hotel Chocolat.

Over the years the brand has evolved and broadened its concept and it actually extends beyond products, shops and online store (retailing) — it also includes a Tasting Club (pre-launched 1998), chocolate workshops  (School of Chocolate), café-bars, a restaurant in London, and a hotel with restaurant in the Caribbean Islands. The company is proud of being a grower of cocoa for its products, a unique status for either a chocolate manufacturer or a retailer. The co-founders acquired a cocoa plantation in the Caribbean island Saint Lucia (2006), an initiative that brought Thirlwell back to his childhood in that part of the world, an origin of cocoa. In the estate of the plantation they opened their hotel (‘Boucan’) and a restaurant (2011). Their restaurant in London, established a couple of years later (2013) to bring West Indian tastes to the UK combined with modern British cuisine (e.g., ‘Slow Cooked Cacao Glazed Lamb Shank’), bears the name of the plantation and the year it was created (‘Rabot 1745’).

In an interview to BBC News, Thirlwell explained the reasoning behind the name — at start there seemed to be no logical relation to hotels. As for the choice of ‘Hotel’, Thirlwell replied: “It was aspirational. I was trying to come up with something that expressed the power that chocolate has to lift you out of your current mood and take you to a better place“, like going on vacation where one would stay at a hotel. As said above, seven years later and Thirlwell materialised the symbolic idea of Hotel into physical reality. Regarding the French wording ‘Chocolat’, he said that “everybody agreed ‘chocolat’ sounded better than chocolate”, which is hard to argue with, and added that the sound of the word almost suggests the sound of how chocolate melts in the mouth (he used the Latin term ‘onomatopoeia’) (BBC News: Business, 27 October 2014).

As reflected from his interview to the BBC, Thirlwell is a devout chocolatier, completely enthusiastic about chocolate. This impression is also supported in a personal page about Angus Thirlwell on the website of Hotel Chocolat. He continues to taste products every day and approves every recipe the company produces. A guiding principle that appears highly important to him is using more cocoa in chocolate products and less sugar. It is said that people started to crave cocoa long before anyone added a grain of sugar. This principle was practised, for example, in a product called ‘Supermilk’ that contains 65% cocoa, emphasises the ‘smooth creaminess of milk’, and includes less sugar than a dark chocolate — a feel of milk chocolate that is nearly a dark chocolate. In ‘Our Story’ webpage, Hotel Chocolat laments the overemphasis on sweetness in British chocolate: “Today, sugar is 20 times cheaper than cocoa, and a typical bar of milk chocolate contains more than twice as much sugar as cocoa”. Conversely, the mantra of Hotel Chocolat is explicitly: ‘More Cocoa, Less Sugar’.

A notion of this motto is felt very present indeed in a number of chocolate products of Delicious Orange Tangs by Hotel ChocolatHotel Chocolat, and it is probably at the root of the magic of their chocolate, and their business success. Just for instance, take their chocolate shells filled with Salted Caramel Cream, or Orange Tangs (orange-filled chocolate sticks) that are truly special and delicious (based on the author’s experience). It is all about the pleasure of eating genuine and fine-flavoured chocolate.

Formally, according to the website of Hotel Chocolat, the company operates 93 shops as well as cafés and restaurants. The Telegraph (24 January 2018) tells us that in the weeks running to Christmas 2017 and New Year of 2018 Hotel Chocolat opened ten new shops, bringing their total number to 100 across the UK. The store locator on the website (provided with an interactive map) suggests, however, that the company may have an even larger number of establishments in the UK — 153 locations are designated as ’boutique’ (shops). There are specifically 26 locations of café-bars, and the restaurant in London. It should be noted that café-bars are mostly (or always) integrated with shops, and Rabot 1745 is a complex including the restaurant, shop and café-bar. The brand is also represented in concessions (51 in total). The conflicting numbers are confusing and make it hard to determine the true current number of outlets of the company (could be a result of duplication in the counts of location types in ‘Our Locations’, apparently mainly due to concessions counted as boutique shops). Hotel Chocolat also has two stores in Copenhagen, Denmark, and several outlets in Ireland (seem to function mostly as concessions).


  • The revenue of Hotel Chocolat Group in the financial year 07/2016-06/2017 amounted to £105.24 million, an increase of 15.5% year-on-year; the net income in that period was £8.76m, an impressive rise of 114.6% year-on-year.
  • Hotel Chocolat Group was incorporated in 2013 and is listed on the London Stock Exchange since 2014 (the founders exchanged a third of their holdings for cash, receiving each about £20m, while in total raising £55m).
  • In the past six months the share price shifted between 240p and 380p, standing in late January ’18 at 333p; market capitalization: £375.5m.
Source:  FT.com, (Market Data)
Sales received a lift of 15% during the 13 weeks to 31 December 2017, attributed mostly to a special package in advance of Christmas (a gin ‘advent calendar’ package), a 100% cocoa collection, and the introduction of no-sugar milky chocolate range. Hotel Chocolat makes 40% of its annual sales in the run-up to Christmas and New Year (The Telegraph, 24 Jan. ’18).

A clear, well-stated and meaningful vision must have helped Hotel Chocolat considerably in its evolution and expansion. It stands on three values people in the company believe in: (1) Originality — not playing by the rules, rather doing things differently, and being creative and innovative. (2) Authenticity — growing cocoa, making and retailing chocolate, being true to cocoa and using natural ingredients (not letting sugar dull the flavour of cocoa itself and not mask the nuances from other ingredients, in line with the mantra cited above), and developing their own recipes in-house at the factory in Cambridgeshire (award-winning). (3) Ethics — committing to a deep sense of fairness that extends to farmers, customers and future generations (i.e., not spoiling the environment with waste in all stages of production).

The description of these three values or principles seems elaborate and specific enough to offer very clear guidelines for all managers and employees in the company to go by. They are accompanied by two business or marketing goals set by Thirlwell: excite the senses with chocolate and making it widely available. The two goals help to add focus to the mission of the brand: the first seems to pertain primarily to the products, the second underlies the network of retailing through physical shops and an online store. Other activities of Hotel Chocolat (e.g., hotel,  restaurants and café-bars, Tasting Club, School of Chocolate) contribute in enhancing the brand: deliver its message across and strengthen closer relationships with customers.

The business revolves around the brand ‘Hotel Chocolat’ and its development as it is their face and voice to the world. That is how customers and other stakeholders recognize everything they do. The more prestigious image of the brand is expressed through their products and packaging, primarily with their premium collections (‘tables’ — e.g., 86 pieces £65, 179 pieces £100). Pricing is also part of supporting the image, though Hotel Chocolat tries not to be excessive (e.g., one can find small-medium packages and boxes for prices in a range of £5-25). The concept of Café bars is gaining weight in aim to come closer to consumers — creating a venue where they can relax and enjoy a good chocolate drink with something light to eat (e.g., brownies) from Hotel Chocolat. The company may tap on a desire of Britons for high-quality chocolate, having a better own experience with chocolates from countries like Switzerland and Belgium. The founders protect the brand from dilution by avoiding, for example, displaying their products on shelves in supermarkets for sale (but their products are sold through concession in departments stores of John Lewis which fits better their brand image). The brand is taken care of meticulously by the founders to maintain an image they worked hard to instill: “a necessity of life, albeit a luxurious one” (Kate Burgess, opinion column, FT.com, 13 March 2016).

The brand of Hotel Chocolat has built its strength in quality of products and the expanse of its brick-and-mortar shops in addition to online retailing, supported by further activities or services. But attention must be paid to challenges ahead. First, how to balance resources correctly between keeping the quality of products and the expansion of the retail network — not falling to the trap of sacrificing the pleasure from the chocolates to their increased availability in the retail chain. Second, how to manage wisely and responsibly reaching out to other countries. In the interview to the BBC News (2014), Thirlwell concluded: “If you are specialist you have got to be absolutely specialist. There is a lot of competition and we want to be in the driving seat.” Consumers who appreciate and love genuine chocolate would surely hope that Hotel Chocolat succeeds in its mission so they can continue to enjoy their delicacies, and be excited.

Ron Ventura, Ph.D. (Marketing)

Read Full Post »

‘Where do I find umbrellas?’ ‘How do I get to the shoe department?’ Questions like this are likely familiar to many consumers when visiting large department stores. Walking long pathways on a floor and moving between floors in a quest to find a needed product can be time-consuming and annoying. Signposts often are too general and lack useful instructions for direction. Mobile mapping applications (‘apps’) of indoors environments, an evolving technological development of the last five years, can make the shopping experience in large stores more smooth, convenient and enjoyable for consumers. A mapping app can be useful not only in department stores but also within large supermarkets, fashion, toys or DIY stores, to give just a few examples. Moreover, navigating in complex structures like shopping malls, airports, hospitals etc. may be made much easier with a mapping app.

Over the years large physical floor maps have been installed in some department stores (e.g., hung on the wall near a lift) — the problem is that the shopper has to try to keep in memory the route to pass to a desired destination. Signage of product directories placed in front of escalators may help the shopper to find on what floor a particular type of product (or a brand) is placed, but one may be left again to stroll a widespread floor until locating the product requested. Signs hung above aisles (e.g., in supermarkets) may not be seen until one approaches the relevant aisle. Some retailers and operators of shopping centres provide printed maps on cards or leaflets to guide their customers on the premises; the map is usually accompanied with index lists and codes for reference, and regions on the map diagram may be printed in different colours to facilitate navigation. Holding a map in the shopper’s hands can be a great relief. Holding a dynamic and interactive map displayed on the shopper’s mobile phone seems as an even greater step forward.

Mapping applications of enclosed environments aim to provide people with spatial information and tools similar to those that facilitate their navigation on roads and in the streets of cities. One can search for an address, a business or an institute, and the mapping utility will show the user its location on the map. Additionally, when used on a mobile device, smartphone or tablet, the application can show the way and follow the user until he or she gets to the destination. In-store, the ‘address’ would typically be a product. An in-store mapping app may show the shopper the location of the product in the store, and perhaps give instructions step-by-step how to get there, yet it will not necessarily be able to follow the user to the destination — an additional layer of technology, a physical infrastructure, is required to locate the shopper on the map and automatically “advance” the map on display as he or she walks in the store.

  • A web-based mapping utility of Heathrow Airport (London), for example, allows a prospect traveller to look for a starting point and a destination in any of the five terminals and their facilities and the online service will provide instructions in text and over the map diagram how to get there.

The GPS technology that usually allows the positioning of users on a map of an outdoors space, and follows the user until he or she gets to a destination, stops working when one enters an enclosed environment of a building. It is additionally not accurate enough to pinpoint the location of a person in a relatively small area, and especially is impractical in distinguishing between floors in the building. Therefore, this technology cannot be applied in mapping applications either in shopping centres or in-store. Alternative technologies have been tested and utilised for indoors mapping: more notable is Bluetooth technology applied with beacons, but there are other options in the field, including Wi-Fi and LED light bulbs for signalling and transmitting location information. Effective positioning of shoppers is said to require a dense network of devices (transmitters) throughout the store, oftentimes an expensive enterprise. Therefore, retailers appear to be more interested in implementing select functions of in-store mapping applications (e.g., orientation, promotions) but are less in a hurry to adopt also the capability of positioning shoppers on a map of the store.

A retailer can deliver via a mobile app promotional offers (e.g., digital coupons) to shoppers as well as updates on new products, services and events. A retail app may  include a bundle of services such as tools for mapping and managing a shopping list for the benefit of the customers. Some retailers already use a location functionality in their stores, independent of mapping, to improve the timing when offers are sent to shoppers during their visit, specific to their location in the store. But this functionality usually utilises fewer devices (e.g., beacons) than would be necessary for a full positioning capability. The mapping tools can produce several advantages: (1) deliver a helpful service to shoppers (e.g., using a shopping list with a map); (2) enhance navigation by location of the shopper on a dynamic map; (3) give a better incentive to shoppers to authorise an app to track their location in the store; (4) mount ‘flags’ of promotional offers for various products on the map near the relevant aisles or display shelves, particularly as the shopper approaches nearby (as a benchmark for illustration, think of information [icons & text] mounted on maps of Google or in an app like Waze).

The map is meant to provide first of all spatial information. Should mapping applications also be visuospatial, that is, display a visual image of the store’s appearance? It would be like making a virtual simulated tour of the store. The experience could be more entertaining (e.g., like gaming) but would it be more informative and useful? If the shopper is already in the store, he or she should not really need the enhanced display — it could be more confusing (screen and reality may interfere with each other) and time-consuming to navigate with such a display. The enhanced imagery display may be useful for planning a visit before entering the store, or perhaps for online shopping in a virtual store. Yet, once a shopper is at the physical store, a visuospatial display should be made an option as a matter of discretion by the shopper while the main display better be a map diagram that matches the actual layout and organisation of the store.

  • Mobile marketing company aisle411, which specialises also in indoors mapping for retail stores, created in co-operation with Google’s Project Tango a 3D imaged environment (“3D mapping”) of a supermarket store with features of augmented reality (e.g., product information. rewards and coupons). [BusinessWire.com, 25 June 2014, see video demonstration — note that the application is operating on a tablet mounted on the shopping cart]

A study published last year (Ertekin, Pryor & Pelton, Spring 2017) sought to identify perceptions, attitudes or personality traits that could motivate consumers to use mobile in-store mapping applications (*). The study focused on consumers from generations X (born in 1961-1979) and Y (born in 1980-1999 — adults likely to be familiar with and orientated to using computer technology and its applications). Actually 80% of the respondents in the sample were of generation Y. All respondents (n=258) had a device that can connect to the Internet (57% had a mapping application downloaded to their smartphone). The researchers considered factors regarding the use of technology of in-store mapping applications and how it would affect the shopping experience (30% of respondents reported trying an in-store mapping application before).

The degree of ease-of-use of an in-store mapping app was found to have a positive effect on intention (or ‘propensity’) to use it while shopping. Perceived ease-of-use was defined as the “degree to which a person believes that using a particular system would be free of effort” (e.g., easy to use, clear and understandable, flexible to interact with). Usefulness of the app pertains specifically to the act of shopping, helping to enhance the ‘job performance’ (effectiveness) of shopping with the map. As expected, perceived usefulness also had a positive effect on the intention to use such an app.

In addition to those functional or utilitarian benefits of the application, the researchers addressed the app’s ability to make the shopping experience emotionally more entertaining (particularly inducing excitement associated with novelty of the technology). Entertainment benefits (e.g., enjoyable learning about stores, fun, or merely a good pass time when bored) also strengthen the intention to use an in-store mapping app.

The willingness to use a mobile in-store mapping app is diminished by greater concern of consumers about sacrificing their security when using a network computing application (i.e., emphasis on protection from malicious software or stealing personal information). Conspicuously, however, reference to data security is only hinted and the sensitive matter of privacy is not properly covered, particularly the reluctance of consumers to let their moves being tracked. If the mapping app provides the user more perceived benefits of the types cited above, they may be less resistant to allow the retailer to track them.

A result that would probably be of interest to retailers shows that consumers who exhibit a stronger deal proneness are more intent on using an in-store mapping app. In other words, consumers who are more leaning towards buying on discounts and deals are more likely to be attracted to the mapping app in hope of finding there promotional offers, easy to locate in the store. Yet retailers should be careful about this finding because if they are too focused on delivering promotional offers through their apps, then they will get shoppers more interested in deals and reward points more frequently than other shoppers. In order to encourage shoppers to extend their in-store visits longer and make more unplanned purchases, promotional offers should be put forward on the app more closely in accordance with the store sections or aisles the shoppers access, when they pass through; where feasible, generate offers in association with products on a shopping list the shopper fills-in on the app (i.e., help a shopper find more easily the products on his or her list while adding products that are more likely to be perceived as complements to them).  Promotions are only one of the ways to encourage consumers to shop more, and that is true also for the ‘package’ offered in a retail mapping app.

The model analysed in this study did not provide support for a positive effect of being pressed in time on intention to use an in-store mapping app  (i.e., apps are not associated enough with saving time or those pressed in time are interested in the mapping app no more than others with more free time). It does not seem to give ground to a concern of retailers that such an app might allow shoppers to shorten their shopping trips, but as suggested above, if needed there are ways to circumvent such behaviour. The model also did not support the hypothesis that consumers who like to gather more market information (e.g., products, prices, innovations) and share their knowledge with others, to advise or actually influence them, are more inclined to use an in-store mapping app to accomplish their goals.

The study makes early steps in investigating consumer behaviour pertaining to using retail mapping apps. It confirms that functional as well as emotional benefits are drivers of consumer use of a mapping app in-store. But the investigation has to proceed to validate and refine those findings and conclusions. While the study targeted young consumers of relevant generations Y and X, the sample consisted of university students (hence probably also the vast majority of millennials). It may be sufficient for establishing relations of the tested factors to the use of mapping apps, but further research should go beyond a student population to cover consumers of these generations to validate the relations or effects. Additional analyses and models (beyond the regression model applied in this study) will have to examine effects more thoroughly or with greater scrutiny (e.g., causality, mediators). Furthermore, consumer disposition towards the mapping apps has to be examined through actual experience and behaviour, for example by letting shoppers perform their shopping ‘naturally’ with an app or by giving them specific tasks to perform with a mapping app in their shopping trip. The study of Ertekin, Pryor and Pelton would serve as an instructive and helpful starting point.

Consumers may utilise a mental map of a store site that they hold in memory to guide them through locations in the  store as in an auto-pilot mode. Mental maps are possible to construct, however, for stores that shoppers visit frequently enough or regularly. Digital mapping apps may change how consumers construct and utilise their own mental maps, stored in their long-term memory. People tend to favour digital information sources and rely less on their own memory. A shopper may need no more than a graph as a spatial model to perform his or her shopping job, or perhaps a more detailed mental model of a drawing similar to a map. Yet the extent to which people also use picture-like mental imageries of the site depends on how useful is the visual information for performing their task, because visual imagery requires greater resources. So visual imagery may be re-constructed more selectively as needed — think of ‘photos’ of specific locations of importance or interest to the shopper (e.g., shelf displays of ‘target’ products) pinned to the mental drawing at the relevant places. A conception like this may be emulated in the digital in-store maps of mobile applications.

Mobile in-store mapping applications present a significant, promising development in re-shaping consumer shopping experiences. It could play an important role in the future of retailing, but there is still ambiguity about the extent to which large retailers would choose to implement mapping features and capabilities, particularly the real-time positioning of shoppers inside a physical store. Mapping applications for retail indoors sites may impact, for example, the balance in preference of consumers between shopping online and offline (i.e., in brick-and-mortar stores).

Ron Ventura, Ph.D. (Marketing)

(*) An Empirical Study of Consumer Motivations to Use In-Store Mapping Application; Selcuk Ertekin, Susie Pryor, & Lou E. Pelton, 2017; Marketing Management Journal, 27 (1), pp. 63-74.

 

 

Read Full Post »

Older Posts »