Bookstores In The Age of Amazon

Shopping for real books in a “real” store was supposed to go the way of the dodo, as anyone not hiding under a rock these past few years knows. 

But interestingly, writes Michael Rosenwald in The WaPo, some bookstores – “indies” no less – are making a comeback of sorts.

Independent bookstores are not dead. In fact, in some of the country’s most urbane and educated communities, they are making a comeback.

In an e-tailing world, their resurgence is driven by e-book growth that has leveled off, dyed-in-the-wool print lovers who won’t (or can’t) abandon page flipping, a new category of hybrid reader (the latest mystery, digital; the latest John Irving, print) and savvy retailers such as the Englands, positioning their stores squarely in the buy-local movement and as a respite from screens.

The American Booksellers Association, which represents independent bookstores, says its membership — it hit a low of 1,600 in 2008 — has grown 6.4 percent in 2013, to 2,022. Sales were up 8 percent in 2012, and those gains have held this year.

Still, as the rest of the article says, their long-term success is far from assured, because of demographics and continuing shifts in consumer behavior. 

So what can book and bookstore lovers such as this writer do, to ward off the (eventual?) demise of bookstores everywhere? Vote with their wallets. 

Retail Customer Service, As A Competitive Differentiator

How do you compete with “Earth’s Most Customer-Centric Company”?

By going well above, and beyond, the call of duty, as Elizabeth Holmes highlights in a WSJ piece today:

“We spend a lot of time, money and energy attracting new customers,” says Richard Baker, chief executive of Hudson’s Bay, Co., owner of Saks Fifth Avenue and Lord & Taylor. “The last thing we want to do is, after all that work, lose a customer over a bad experience.”

That is why Andrea Robins spent several hours on a recent weekday hunting for a handbag. Ms. Robins is Saks’s senior director of customer service, who solves problems that escalate from any of the retailer’s 113 full-price stores and outlets. A customer at a Saks Fifth Avenue store in Florida had bought a $1,850 Gucci bag to be shipped to her daughter in Washington state. The store mistakenly sent it via ground, not air, and the bag wasn’t going to make it in time for the daughter’s birthday.

“It’s not acceptable to say, ‘We’re human and a mistake was made,’ ” Ms. Robins says. “The commitment to service says, ‘Now what are we going to do to fix it?’ “

Ms. Robins and her team first tried to reroute the package to a faster shipping method—but that wouldn’t be fast enough. They considered placing a new order for the handbag with quicker shipping, but it was out of stock. Finally, they called up a Gucci store in Seattle, bought the bag from the retailer and had it sent to the daughter—just in time.

At the “low end” – which probably means anyone buying bags $200 and under – I guess the best bet then is to temper expectations. Or shop at Amazon.

Why Does A Chicago Grocery Chain Want To Eliminate Loyalty Cards?

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As the cognoscenti know, stores of every kind use loyalty cards to gather valuable data on consumer behavior and shopping patterns. In return, customers are rewarded with special offers, discounts, coupons, etc. 

So why is Jewel-Osco, a Chicagoland-based grocery dumping its loyalty card program? And it’s not just Jewel but its sister chains too. 

Pradeep Chintagunta, a Professor of Marketing at the University of Chicago, Booth School of Business posits four explanations, two of which are excerpted below: 

One possible reason could be simply to change perceptions. Walmart has been waging an aggressive advertising campaign against Jewel; the ad shows how much a customer would save by shopping at Walmart vis-à-vis shopping at Jewel (click here to see this ad in the Chicago Tribune). By discontinuing the loyalty card and proclaiming that “all customers deserve low prices,” Jewel might be attempting to change perceptions without actually changing prices or its pricing strategy. After all, most customers got the loyalty card prices anyway. In other words, consumers might now perceive prices to be lower, even if Jewel ran the same promotions before and gave consumers the same discounts.

A second possibility is that Jewel has figured out another way to access the same information. If a majority of the bigger-ticket baskets are paid for using credit or debit cards, Jewel may be able to extract information on purchases by obtaining the corresponding data from the card companies. Collating all purchases of a household at the Jewel store would produce data very similar to the corresponding data from the loyalty card. Another possible benefit of these data is that Jewel may be able to get a measure of its “share of wallet” – how much its customers are spending at Jewel relative to their spending at other grocery stores. This information is not available with store-specific loyalty cards and may therefore be more useful.

You can read the rest of the Tumblr post here

PS: The link in the 2nd paragraph of this post takes you to a Time article by Brad Tuttle (I recommend you follow him on Twitter here) that mentions chains like Whole Foods and Aldi’s competing very successfully with their peers without ever having a loyalty program. True…but those also serve a more premium customer segment that probably can’t be bothered to scan a loyalty card in the checkout aisle, no?

(Not An Oxymoron. Anymore.) High-End Store Brands

For the longest time (which basically means “since I started paying attention”), store brands were synonymous with cheap and/or low-quality products.

But Target seems to have successfully changed that behavior in the middle-of-the-road category and is now all set to launch a high-end store brand called “Simply Balanced”, as Brad Tuttle writes on Time Business:

Overall, consumers are increasingly accepting of store brands not merely as good values, but as just plain good. And they’re increasingly willing to pay more, at least compared with the old no-name brands of the past. In 2012, the Wall Street Journal highlighted how store-branded-food prices had been rising more quickly than the big brands.

The article singled out Target’s Archer Foods in particular as an example of this. In essence, Archer Foods was able to transcend the no-name connotation, to the point that Target could hike prices.

Now that Archer Foods is necessarily cheap and yet still considered appealing to shoppers, Target is trying to push the idea of a store brand to the next level — in terms of quality, nutrition and price alike. Simply Balanced food prices may compare favorably with some other organic upscale products, but the new Target brand isn’t cheap. Target just so happens to have its own inexpensive store brand: Market Pantry. The fact that the retailer is pushing three separate in-house food brands is clearly a sign that store brands have come a long way.

Which is good for Target…and doubly good if it actually started to enjoy pricing power on the strength of Archer Foods (a brand that, as a consumer, I will admit to having positive associations with – good job there, brand managers and quality + taste overseers!).

But since supermarket shelf space is a limited quantity, this doesn’t augur well for high-end brands that Target carries. In fact, if I were such a brand and if I thought that I had built myself a nice little competitive moat thanks to my name and presumed quality and/or other attributes, I would be watching this more than mild alarm. 

PS: As an aside, I always thought that Costco, with its Kirkland in-store brand, had successfully trained customers to expect and pay for quality. Or is that because your average Costco shopper is more enlightened and knew early on that Costco would never compromise in any way with even a single thing it sold?

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?

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