How Retailers Make You Spend More

At this time of year, the retail market always gets more competitive, cluttered and chaotic. However, given the sector’s contraction in 2017, it is more important than ever to maximize your sales during the upcoming holiday season. To inspire you to stand out and sell, here are proven best practices from four retail dynamos to help you boost your sales revenue to stay competitive and grow your e-commerce site so you end 2017 strong.

 

  1. Zara- Fast Not First

 

Global fast fashion powerhouse Zara knows location is everything. The retailer selects real estate strategically, opening stores in areas where it can cozy up to high-fashion brands. By surrounding Zara stores with upscale retail stores selling exorbitantly priced products, Zara looks significantly more affordable for products that appear somewhat similar to its neighbors’ – which motivates shoppers to buy from Zara.

zara color trends chocolate

The products at Zara reflect trends popular among upscale apparel brands rather than Zara’s direct competitors like H&M or Forever 21. As a result, Zara’s merchandise looks high-end and feels exclusive, which improves the brand experience by offering a premium look for an affordable price. Similarly, for your online assortment, make your products look closer to your aspirational competitors than your actual competitors so shoppers feel like they get more value when they buy from your company.

Zara also strives to be fast, not first. The company adapts to fashion trends at a comfortable pace for most of its demographic, while keeping its merchandise rotation fresh and timely. Instead of having a first-to-market mindset, Zara taps into consumers’ strong fear – and regret – of missing out. The retailer uses scarcity to boost consumers’ desire to buy items immediately rather than risk coming back later and finding their size is gone. That’s why at Zara stores “there’s always something new, and clothes are never stacked too high,” which influences Zara shoppers to pay full price to seize the opportunity to buy right away. On your e-commerce site, the timing of trends is everything, as you don’t want to be too early or too late with trends. Identify your optimal window and consider limiting your inventory to activate consumers’ fear of missing out, as the scarcity principle can boost sales.

 

  1. Target- Try Getting Out

 

Have you ever noticed the lack of background music in Target stores? It’s deliberate. The mass merchandiser’s decision to exclude music is an attempt to make the customer experience more enjoyable by preventing shoppers from being distracted from all the fantastic in-store deals. How can your e-commerce site cancel out the extra “noise,” such as decluttering your homepage or making the buying process as simple and streamlined as one-click ordering so shoppers can concentrate on discovering and buying great products?

 

In a Target store, consumers may find that navigating to their desired aisle is like going through a fun maze filled with treats, great deals and eye-catching displays. Similarly, keep your online customer journey positive and enjoyable from the homepage banner to the checkout page by designing a customer-centric, inspiring web architecture. Fill each webpage with attractive and even unexpected products to surprise and delight shoppers to make them more willing to explore and spend.

 

Just like customer experience leader Starbucks, Target excels at anticipating customers’ needs for a frictionless customer experience. Associates focus on helping people rather than pushing products. For instance, store associates proactively look for the next problem to solve, rather than aggressively trying to sell. Attentive associates notice shoppers’ patterns and pain points to serve better. On your e-commerce site, which scenarios pop up often, and what can you learn from them to better anticipate consumers’ out-of-the-box needs? For instance, perhaps you can simply let customers try before they buy to prevent the hassle and time associated with product returns to improve brand trust, sales and loyalty.

 

Winding through Target’s spacious store footprint can tire out shoppers as they navigate from one corner of the store to the other. The retailer grasps their exhaustion as an opportunity to wave relaxing products in shoppers’ faces to encourage pampering to reinvigorate them. Similarly, your e-commerce site should match your customers’ lifestyle needs to the products you recommend they add to their cart. Use data on consumers’ preferences, past purchases and consumer reviews to determine which items to recommend as solutions to their pain points, which can encourage them to spend more.

 

 

  1. Sephora- Trying is Believing

 

Cosmetics giant Sephora generously offers shoppers free trials and samples to take home, the retailer encourages consumer awareness and engagement,  increasing the likelihood that shoppers will like and buy their products. This tactic reflects the principle of reciprocity: when someone gives us something we feel compelled to give something back in return. Do you “give to get”? Do you allow shoppers to sample your products to help them believe in your merchandise and trust your company?

sephora product display

Also, who among us can resist adorable travel packs? Sephora displays these miniature products at the checkout counters- impulse purchases masquerading as endearing, affordable luxuries. With their single serve size, innovative packaging and colorful assortment, travel packs look irresistible, which increases their sales, even when their unit price is a smidge ridiculous. Does your e-commerce site offer single-serve units or the equivalent – something small, cute and too attractive to turn down?

 

Sephora also offers a 60-day return policy. The company permits the free return of used products if a customer exceeds a certain purchase amount. That way, if a beauty item irritates their skin or a lipstick looks less flattering at home, shoppers feel assured they can return the item, which increases their likelihood to buy it in the first place. How does your return policy compare to Sephora’s?


  1. Macy’s- Pay More To Pay Less

 

Department store chain Macy’s is using its new loyalty program to reward customers based on how much they spend, so when shoppers spend more, they pay less. Providing a direct relationship between purchases and discounts can inspire repeat purchases by rewarding their loyalty.  On your e-shop, do you reward your customers with discounts and offers after their purchases to motivate them to keep coming back?
Another way Macy’s convinces shoppers to buy more is with discount bundling. By offering multiple products at the same time, the retailer increases the average transaction value and appeals to consumers by showing how much they save by buying the products together rather than as individual items. Consider bundling multiple products on your website and emphasize the savings shoppers receive if they buy the items together.

 

By offering a full refund on cosmetics, Macy’s earns consumer confidence because shoppers know they avoid the risk of having to keep a purchase they regret. Consumers feel more willing to spend if they know they can return a product without any hassle or financial consequences. Does your e-commerce site offer a full refund policy to make shoppers more open to buying?

 

Macy shoppers do not need a receipt to exchange items, which makes the shopping experience smoother, friendlier and more generous than exchange policies that demand receipts. Easy exchange policies make customers more willing to buy. When online customers shop on your site, what exchange policy do you offer?
These proven customer-centric tips helps major retailers persuade shoppers to buy more. These effective tips can also help you boost your e-commerce website sales and – best of all – there’s still time to implement them to maximize your holiday sales this year.

We’ll be up looking at the data while you’re chasing bigger targets. Optimize your retail business and always stay ready for the New Age Shoppers. Get a free assessment !

 

 

 

Can Babies Save Toys ‘R’ Us?

Two days ago, Toys ‘R’ Us filed for Chapter 11 bankruptcy protection – mere weeks ahead of the critical holiday season – to restructure amid crippling debt, declining sales and relentless competition from retail powerhouses.
In recent years, Toys “R” Us has spent hundreds of million of dollars on interest expenses, which left few resources to fund its e-commerce website. By contrast, Amazon and Walmart dominate e-commerce due to a robust online presence, lower costs and fast home delivery.

Chief Executive David Brandon cited the immediate need for Toys ‘R’ Us to build inventory for the holiday season, which accounts for 40% of annual revenue.The retailer will also overhaul its web presence, digital customer loyalty program, ship-from-store capabilities and delivery time.

baby picture
Baby products as a competitive strength : Recent sales figures suggest Toys ‘R’ Us has a strategic advantage in the baby products (vs. toys) category.

 

Babies ‘R’ Us brand to play a bigger role

Last year, baby gear accounted for 36% of Toys ‘R’ Us’ total U.S. revenue, so this category represents the company’s biggest share of domestic product sales. These results suggest baby products are the brand’s strength and core differentiator. As competitors Amazon and Walmart grow their market share in the toy category, Toys ‘R’ Us could benefit by focusing on baby products.

As such, Toys ‘R’ Us’ turnaround strategy will also involve investing $277 million from 2018 through 2021 to convert existing locations into side-by-side storefronts dedicated to toys and the Babies ‘R’ Us brand, as profits suffered in locations where Toys ‘R’ Us and Babies ‘R’ Us operate separately.

Emerging trends in the baby category

The baby products category has an estimated value of $30 billion industry and major recent category trends include:[v]

  • E-commerce share increase:

    Online retail gained share points to account for more than 20% of baby product sales; Toys ‘R’ Us’ competitors Walmart, Target and Amazon all earned e-commerce share gains. This means Toys ‘R’ Us needs to focus more on its online business to avoid losing any more market share to online rivals.

  • Children in home don’t boost sales:

    Surprisingly, having children in the home does not improve consumers’ odds of purchasing baby products, as 58% of buyers were households without children. This is good news, as Toys ‘R’ Us can expand its marketing campaigns to target doting grandparents, baby registries, relatives and friends of families with children – especially leading up to the holidays.

Child-free households shop for babies, too : A surprising number of baby product consumers include grandparents, siblings and friends, as shown by this chart from TABS Analytics.

 

Shopping behavior within the baby category

To achieve a competitive advantage with baby products, Toys ‘R’ Us must understand the differences in shopping patterns within this category.

Overall, online retailers – including Walmart.com, Target.com, Amazon.com and Diapers.com – earned a 2% increase in share of mentions in most baby segments; meanwhile, specialty outlets, like Babies “R” Us, Toys “R” Us and department stores decreased. This means offering a robust, efficient online shopping experience must be a priority for Toys ‘R’ Us to keep up with the new retail reality that shoppers like to research products, compare prices and shop online.

Some distinctions within the baby category include big box and discounter rivals’ strengths. For instance, among diaper products, online purchasing share grew 2 percentage points, up to 22% in 2016. Target.com gained 1.1 percentage points in diaper sales at Target.com and specialty dropped overall by 2.3 percentage points with the biggest drop at Babies ‘R’ Us. Toys ‘R’ Us and Babies ‘R’ Us must consider shoppers’ needs: they may shop online because they don’t want to take their infant to the store, wait in line and carry big, bulky boxes of diapers to their car. Again, the e-commerce strategy must be a priority. While, it’s easier for people to buy diapers on a trip to the supermarket, it’s harder to draw them to speciality stores just for baby products. Now, were this to be moved online, things can get so much more convenient for targeted shoppers.


However, among baby needs products, which include shampoo, lotion, soap, powder and ointments, online sales grew 2.8 percentage points since 2016. Notable growth in this segment also took place among discount grocery retailers like Aldi and Save-a-lot. Toys ‘R’ Us should consider that value pricing and online convenience may be priorities for consumers of these types of baby products. What can set them apart are exclusive toy franchisee lines and novelty toy collabs that venture beyond the category to all baby-focused merchandise.

 

Looking beyond the domestic market for growth : This year, Toys ‘R’ Us announced it would open more stores in China to take advantage of conditions that align with the retailer’s target market.

Capitalizing on a baby boom

Following yesterday’s announcement, Toys ‘R’ Us’ Canadian subsidiary announced it also plans to seek protection. However, the company’s other foreign operations, including more than 250 licensed stores and joint ventures in Asia, are not part of the Chapter 11 filing.

Earlier this year Toys ‘R’ Us invested in more physical stores in China and e-commerce operations, as the country’s market conditions look favorable. For instance, China eliminated its one-child policy, so more babies could mean more demand and sales for Toys ‘R’ Us’ baby products. In addition, the country has nearly half a billion middle-class consumers who are increasingly affluent, tech-savvy and willing to buy safe, quality products made overseas, making these shoppers ideal targets for the retailer’s omnichannel operations.

Wherever Toys ‘R’ Us operates in the world, if it focuses on the baby products market, the company must adapt to these emerging trends and shopping behaviors to better serve consumers and remain relevant in this fierce retail market.

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A model can make even a lackluster piece of clothing look gorgeous by highlighting its silhouette, showing how the garment fits with other pieces, and encouraging an aspirational approach to buying. Of course, almost no one can afford the best models, and few small business owners can afford professionals. This leaves most businesses to choose between mannequins (or other displays, such as fancy hangers) and amateur or part-time models. Continue reading “Model vs. Mannequin: Which Produces More Sales?”