Wednesday, March 09, 2005

Spin-up retail stores

Inc magazine has an interesting article about "instant markets" and "spin-up" businesses. New products and services are introduced so often that as soon as you begin your company you need to starting thinking about reinventing it. The shifting landscape of "instant markets" requires speed and agility. This is particularly true in retailing, where you must constantly update your inventory to sell the latest and greatest ... or someone else will.

The article suggest "spin-up" companies as a solution to shifting markets. Spin-ups are new, fast-growth business units with their own identities. Focus and grow the new unit even if it means letting other parts of the company languish.
Seen many commercials for Apple Macintosh computers lately? Probably not, but you can't escape those dancing silhouettes with the white ear-bud cords. The iPod is the spin-up that ate Apple -- and Apple isn't complaining, given that the iPod has handed the company its first runaway hit in years. Hewlett-Packard's photo-printer business has likewise exploded -- to the extent that Wall Street now regards the unit as representing virtually the entire value of the company.
Rather than building on an existing brand identity, a spin-up creates a new one, often overshadowing or even subsuming what came before. It's a different way of thinking about a company -- not as a seamless whole but as a fractured conglomeration of potentially independent units, some leaping into being and growing fast, others withering away.
Examples in the restaurant are cited. When a company has several restaurants, each with a unique concept, those are spin-ups.

Retailers can do the same thing. New niches sprout all the time in all retail lines. Instead of trying to serve them within a larger store, the niches can be spun-up in their own store with its own identity. This may be necessary to capture the niche ... teens looking for surfer clothes aren't going to shop in their parents' department store even if it does stock the stuff.

A diversified portfolio of small shops may have a better chance at long-term success than a single, large store. Markets change ... don't get caught with all your eggs in one basket.

Pop-up stores with their short life-span are tailor-made for executing an aggressive spin-up retailing strategy.

Tuesday, March 08, 2005

University of 7-Eleven

7-Eleven stores holds a "University of 7-Eleven" conference to teach franchise holders the newest techniques for changing the convenience store image. The company is trying to become known for fresh food -- hot dogs and sandwiches that haven't been sitting around for ages. Fresh pastries three times a day.

And they're trying a little healthier and better tasting food too.

The company has 28,000 stores around the world. They're developing foods based on their world-wide experience, including includes rice products under development to resemble the popular rice balls sold in Japan.

The company's history will make it difficult to change its image. Training for store managers is a fine idea, but the image of huge Big Gulps and Slurpees, crappy service and dingy stores might stick with them for a long time.

Monday, March 07, 2005

The William H. Whyte of retail

An interview with Paco Underhill from Metropolis magazine.
In your book, you're critical of retail designers. Why?
First of all, I don't mean to point my finger at just retail design. It's the entire design profession. If we look at the history of design education, very little of it is about people, sociology, or psychology. It's all about drawing, structure, and form. And I think that's a flaw in the education process.

We also must recognize that historically the design profession--particularly architecture--has been one of the least gender-integrated artistic disciplines. We live in a world that's run by men, managed by men, owned by men, and yet women run the families and are overwhelmingly the main retail consumers.

But the problem with retail design isn't just rooted in the architectural houses that do the work. First you must realize that the depreciation schedule for retail fixtures is about five years. So by definition what makes a good store is always in transition. It's designed for a limited life span. Materials, technology, and lighting issues change constantly. I also think that retail design has been asked to do things by the financial markets that don't do it justice. For much of the past 25 years, retail has focused on opening new doors rather than on improving or understanding the existing market. So the design process has been crash and burn--get the damn thing done, do the best you can, and accept mistakes along the way because we don't have time to stop and fix them.

Part of what's interesting now is that we're not in the same expansion mode. No one opens a new store or shopping mall to serve a new market; they open it to steal someone else's market. We're also getting to a point where, increasingly, we're going to see a lot of vacant real estate out there.

Sunday, March 06, 2005

Affordable fashion spells retail business success

The next collection from haute couture designer Karl Lagerfeld is not going to appear in exclusive boutiques, but at the Stockholm-based mass-market retailer H&M. Has Lagerfeld abandoned his traditional high-end clientele in favor of the great unwashed, who will be able to wear his tops, dresses and turtleneck sweaters this fall?
Not at all, says the revered 65-year-old designer with a penchant for ponytails, sunglasses and deep, dark, tropical tans. He's just moving with the tide as he sees it, taking his talent to where the fashion current's flowing.

"Because people who buy Chanel and other expensive things buy there, too," he said in an interview. "For me, this is fashion today. People wear t-shirts and jeans with exceptional things."
Starting in November, Lagerfeld's small line of clothing and accessories he is designing, called "Karl Lagerfeld for H&M," will appear on store racks at the retailer that specializes in serving up a non-stop stream of fashions priced for the comman man.

H&M, which opened its first shop in a Stockholm suburb in 1947, has hit fashion gold with its strategy of providing the latest fashion at inexpensive prices, with store collections that change at dizzying speeds. It has 991 stores in 19 countries. Cheap doesn't necessarily mean low-quality in this day and age.