The Machine Will Fit You Now – Retail Adventures

When you are ready to spend $30, $50 or more on a shirt, a pair of jeans or even a T-Shirt, retailers want to make sure that you can quickly and easily find something that fits. Because, when they do that, it increases the probability of you buying something there and it probably prevents you from returning ill-fitting clothes later. 

Enter the “Me-Ality” machine. 

As Abha Bhattarai wrote on The Washington Post last month, it is

A futuristic-looking machine that uses radio waves to measure 200,000 points along your body. Ten seconds later, the system uses that data to spit out a list of jeans, sorted by color, style, fit and brand…

…

Me-Ality representatives say the machine uses the same technology as airport body scanners. Customers are asked to take off their shoes and hold their arms away from their bodies while a wand-like contraption circles around them twice.

“We want people to feel comfortable,” said Ahmed Aslam, regional manager for Me-Ality. “We don’t want them to feel like they’re at an airport.”

Aslam would not disclose how much each machine costs, but reports show that similar airport body scanners cost about $180,000. 

At that price, not every store will be able to afford them of course (so will large malls perhaps offer them as a service for small tenant-stores? Or, will Me-Ality offer the device on a lease basis?). Those that do may be able to differentiate themselves and win over more shoppers.

PS: Interestingly, from what I can tell, the machine’s recommendations are tied to sizes in specific brands (Ex: “Size 6, Lucky Jeans”). What this means is that shoppers could presumably get their “fit data” and then shop elsewhere (online?) based on price…which hurts the retailer whose machine the shopper used, but not the clothing brand itself. 

Purchasing “Intent” and Behavior = Higher Prices?

Sometimes ideas that come out of research offer plenty of food for thought – both the good kind and the not so good kind. 

Consider an excerpt from a piece by Tom Ryan on RetailWire:

Technology is increasingly available that enables retailers to alter prices on certain products based on customers’ intentions to purchase or not purchase other products. Researchers at the University of Arkansas label the practice “sequential pricing” and claim it can be highly profitable.

According to a new study from the university, sequential pricing occurs when a seller, aided by technology, is able to set the price for a subsequent product based on a customer’s interest in or preference for an initial product. 

They are not talking about reducing the price on something based on what the shopper just bought, or even added, to his or her shopping cart. Au contraire, they are positing that “sequential pricing” can be used to increase prices, resulting in higher profits. 

That’s great in theory – but can you imagine the consumer firestorm that will be set off when, say, Amazon (who I don’t think will do this, just to be clear), raises the price on a pair of jeans because you added a matching pair of shoes or a shirt to your shopping cart?

An Interesting Twist On Online Shopping, From The Gap

Say you want to buy something from Target or Best Buy, but don’t want to waste time finding it in-store. So what you do is find it with a couple of mouse-clicks, pay for it in the same session, and then stop by the store during lunch or after work and pick it up. 

Easy enough…and anyone with largish brick-and-mortar stores offers this today. The retailer gets the sale and the customer gets convenience and quick gratification.

But Gap is introducing a twist on this, writes George Anderson on Retail Wire:

What makes the Gap program different is that consumers don’t pay for the item online, they complete the purchase in the store giving sales staff more face time with the shopper.

So their reasoning is that the “face time” results in either more sales or increased customer satisfaction, or perhaps both. While this is certainly innovative, I can’t help but wonder about two potential problems:

1. Shoppers may reserve something, but since they didn’t pay, they may change their mind or be too lazy to show up to complete the rest of the transaction. [Having two options - one to pay for it online and then show up to just pick up, and the other to reserve-only online - may help…]

2. Shoppers may – or may not – want to talk to the sales people. If these guys were Neiman-Marcus or even Nordstrom, sure – but Gap shoppers? Or maybe they do…curious to see what their market research might have told them. 

Still, this is an innovative twist. Other retailers, not just The Gap, will probably be very interested to see the results.

Tesco’s US Adventure – Fresh & Easy, But Also Costly

Tesco, the world’s third largest retailer, after Walmart and Carrefour, entered the US market in 2007. 6 years and 1 billion pounds later (1.2B pounds, per a NYT piece from today), it is leaving – once it decides exactly how to exit. 

Failures are never pretty for shareholders or employees, but the point of this post is to briefly discuss how consumer behavior regularly defeats executives and large multi-national companies in “foreign” markets.

Of course, consumer behavior defeats execs and local companies in “home markets” on a regular basis too – just ask J C Penney. But when a company tries to build on domestic successes, abroad, it faces a number of problems such as regulations, contract risk, local partners, foreign exchange fluctuations, etc.

But the biggest problem is consumer behavior.

(more…)

JCP, Suppliers and The Credit Line

One of the first things that Myron E Ullman III has done, after being brought back as J. C. Penney’s CEO, is to tap into a $1.85B credit line. Not all of it, though. Just $850m.

On the face of it, one might think that this is a reflection on its finances. Or, it could be because they have major upcoming capital expenditures and inventory needs, as their PR release said.   

Maybe not, writes Peter Eavis on The NYT’s DealBook.

Instead, one reason Mr Ullman might have used the credit line to increase cash at hand is to calm JCP’s suppliers, he says:

When a department store faces financial problems, suppliers get nervous and demand to be paid for their goods much more quickly — or even up front.

This can reduce cash balances at the retailer, in turn prompting suppliers to demand even stiffer payment terms. Eventually the spiral can lead to bankruptcy. Witness what happened to Circuit City, which collapsed four and a half years ago.

It doesn’t have to end like that, though. There are instances of retailers taking actions to buy time and quelling the nerves of suppliers in the process. One example is Sears, which last year avoided an aggressive squeeze by suppliers even though its operations were still faltering.

Certainly sounds plausible – and is an interesting take on an otherwise routine(?) development. Anyone in the retail industry that is reading this care to comment?

Jeff Bezos Writes To Amazon’s Shareholders

“Amazon exists to serve customers. Serve customers well and profits – in the long-run, revenues in the short-run – will follow”.

That seems to be the summary of Amazon CEO Jeff Bezos’ most recent letter to shareholders.

One excerpt from the letter that illustrates Amazon’s customer-specific philosophy at work, that I liked:

When you pre-order something from Amazon, we guarantee you the lowest price offered by us between your order time and the end of the day of the release date. “I just received notice of a $5 refund to my credit card for pre-order price protection. . . What a great way to do business! Thank you very much for your fair and honest dealings.” Most customers are too busy themselves to monitor the price of an item after they pre-order it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.

Another excerpt, this time about investments in businesses that may only pay-off in the future, is also worth reading:

(more…)