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.

Consumer Behavior – Colors Matter, Not Just Calories

In the beginning, or at until 1990, most food packaging in the US might have included pictures of what was inside. Or, if that wasn’t going to work, it might have included pictures of happy, healthy and otherwise satisfied customers enjoying whatever that product was. [Except in China, I guess, where, according to an urban marketing legend, happy baby pictures on baby food jars horrified customers who thought the jars contained...]

That changed with the Nutrition Labeling and Education Act, which mandated nutrition labels for most foods sold in the US. Other countries have their own versions of similar laws. 

But for the most part, do most consumers really care?

Quick show of hands – how many of you scrutinize nutrition labels before deciding to buy something at your local grocery store? Oh, wow, really? Ha! I guess this blog does attract some very discerning and smart consumers…

Anyway.

Over the last decade or so, with the increase in health consciousness (if you use organic food’s ascendant sales as a proxy for general health consciousness, at least in the US, it looks like this is a real trend), makers of packaged foods have taken note. 

Labels like “Smart Choice” (includes Fruit Loops though!) are a direct response. Some, such as Mars Inc., took the additional step of summarizing key nutritional data (total number of calories and % Daily Value) on the front of their packaging – to help with consumers’ (impulse?) purchasing decisions and to probably differentiate themselves. 

But according to an interesting study by Jonathon P Schuldt at Cornell University (via The Washington Post), the colors used to present such data matters as much as the data itself, if not more.

(more…)

What Should This Business Blog Be, When It Grows Up?

Blogs come in two flavors.

The first one is where an under-appreciated and lonely hack somewhere writes stuff he thinks is interesting and important.

The result is three or four posts a day, at best (ahem) – most of which are mostly ignored by the masses. Unless you are Joe Wiesenthal @ Business Insider, that is, and work from 4am to 10pm most days of the week, produce 15 blog posts on an average day (more, on non-average days), 150 Twitter posts and somehow find the time to also be the BI’s Executive Editor. But that is probably not a mortal-friendly lifestyle. 

The second one includes blogs that people like Andrew Sullivan and Mark Thoma run.

These blogs are curated windows into life in general (anything and everything is fair game, though politics gets a lot of coverage on weekdays) and economics, respectively. On a typical day, these guys may write a few original pieces, create 10 to 15 posts that excerpt other articles and posts, post on Twitter, etc.

In Andrew’s case, the result is that readers get to read not just his excellent analysis of many things in the news but also “discover” things about the world that they would have a tough time doing by themselves. As an example, just today (and its not even 12.30pm ET, yet), he’s already posted about Carbon Footprints, Steven Soderbergh’s latest film Side Effects, something called The Transitory Web, a critique of formulaic documentary filmmaking, the Plight of the Megacommuter and three different posts on politics. 

Mark Thoma’s blog, on the other hand, is more of a “One Blog To Rule Them All” for macroeconomics. From the looks of it, on a daily basis, he consumes a hundred (or is it two hundred?) different articles and posts on economics from around the world and either creates new content, excerpts from a selection of those articles and posts or just dumps links to some of them on his blog. So if you’re into macroeconomics, you could just follow his blog and know what you need to know. Period. 

OK…so what does this mean for yours truly?

Since starting this blog back in July 2012, I’ve often wondered what this blog must be, when it grew up, which it probably has, today, at all of 9 months of age (thank you for faithfully reading a lot of what I have since posted). 

It is relatively easy and marginally satisfying to create just 3 or 4 posts (on a good day) about things that are in the news, or things that strike me as I drive past my neighborhood Zinga. But at the end of each day, my Inbox, which I use as a To-Do list of sorts, is full of links to articles and thoughts and ideas that didn’t get written about or analyzed. Their collective weight is a crushing burden (such is the restless blogger’s plight). 

So, starting this week, initially as an experiment and perhaps permanently – based on my ability to keep up and “audience interest” (ahem, again) – I will attempt to run this blog as a curated window into the world of business. What that means is that I will (still) write at least one, if not more, original posts, every day. In addition to that, I will, ala Messrs Andrew and Mark, excerpt the more interesting articles and posts that I consume every day – but with comments, dissents, snarks and such. I may also engage in some “link dumping” but we will see how that goes. 

One last thing…to prevent mass email digest subscriber defections because of daily emails with 25 random posts, I will be switching to a different email sending service this week – one that gives me more control over what my subscribers see. 

Who knows, but with luck, perseverance and possibly reader interest, perhaps this blog will actually become an online destination of sorts?

Thanks for reading…Hope you stick around!

PS: Thoughts? Comments?

Mall Shopping In Russia: Buying What We Want, Not Need

Who knew that Russians spent 60% of their income on shopping?

Fueled by a 13% flat income tax rate, minimal health care (yes, socialized) expenses and little to no housing expenses, it looks like Russians, especially the expanding Russian middle class is taking to shopping and consequently malls, like fish to water.

Over the last decade, different mega malls (including the MEGA chain of malls, one of whose locations is pictured above), each larger than the previous one, have opened up across major urban areas in Russia. Unlike malls in the US that are anchored by a JCP, a Macy’s or a  Nordstrom, malls in Russia appear to be anchored by large grocery stores.

And…why grocery stores? Convenience, for one – but also some applied consumer psychology, per the NYT article that served as the inspiration for this blog post.

Just a couple of decades ago, Russians were used to standing in lines for things like milk and bread. So those old enough to remember – meaning, anyone that is, say, 40 or over today, gets the psychological warm and fuzzies from seeing milk, bread and other grocery store staples stacked in overflowing shelves. And on top of that, like malls in the US, they have warm kids’ play areas (good for the long winters) and restaurants (Sbarro, anyone?) 

Western financial firms such as Morgan Stanley of course are getting in the game and trying to position themselves for the expected boom in demand for “Class A” commercial retail real estate, a trend that could last two decades, if the US is any indicator.

These firms of course, are trying to balance a slowdown in other parts of the world, especially Europe, Africa and the Middle East and are instead routing their billion dollar funds into other regions and countries that promise short-term and long-term-ish returns such as Russia, driving up deal making and eventually prices:

Deals like Morgan Stanley’s Galeria purchase increased Russian commercial real estate sales by an annual 4 percent to $5.9 billion in the first nine months, according to data compiled by Real Capital Analytics Inc…

 

Morgan Stanley joins companies including Hines Interests LP, Gazit-Globe Ltd. (GLOB) and Ikea Shopping Centres Russia that are seeking to benefit from a consumer-spending surge as the economy of the world’s largest energy supplier expands. 

Eventually, of course, rents will rise a lot, the next round of the global economic cyclicality will diminish shoppers’ appetite for shopping, shoppers will discover the benefits of shopping in outlet malls (already becoming popular in Russia) and/or online shopping, and finally, the rise of strip malls will lure some shoppers away.

For now though, the party will continue:

“I feel like I’m in Disneyland,” Vartyan E. Sarkisov, a shopper toting an Adidas bag, said recently while making the rounds of the Mega Belaya Dacha mall.