Sunday, September 30, 2007

Tote-al Visibility

I have been a regular shopper at Whole Foods for a few years now. And I have seen the crowds grow bigger with each passing season. The organic foods category has been getting more and more consumers which has contributed to increased sales for retailers like Whole Foods. But is that all that makes them successful? There are several examples of smart retailing practices that Whole Foods uses but I would like to share one that I had an experience of. Now we all know that Whole Foods has been quite active in promoting and using environmentally friendly things in their stores. One of them is a cardboard tote that I purchased at the local Whole Foods (formerly known as Harry's Farmer's Market) few months back (image below)

The reasons I bought them was carrying the paper bags was a hassle, plus the contents of the bags spilled over in my car trunk. The cardboard box was easy to handle, sturdy and had sufficent space for my weekly grocery. So why I am telling all this???? Well it all began with a conversation I had with a co-worker. I was telling them how Whole Foods is building and preserving its brand through the example of the cardboard tote by citing the following
  1. Addressing the environment friendliness by providing means to avoid plastic
  2. Giving it a more personalized feel to grocery shopping as compared to baggers quickly stuffing your buys into translucent plastic bags
  3. Cost savings for customer in the form of a 25 cent refund everytime you used the tote. The tote box cost me $1.5 which I recovered in a month and a half through weekly trips.

And my co-worker responded saying .."and add to that the additional customer service you get!!!" And I thought aloud "Customer Service???" and then it struck me, as I carried the tote through all the aisles, I was a walking sign board to every store associate that I am a repeat customer and needs to be given attention. Now isnt that how you sustain profitability in retail ...through repeat customers and making sure they are given the best service!!!

Friday, September 28, 2007

Lessons from across the big pond

Tesco's entry into the US market is old news now. But I would like to refer to a very interesting article published by The Economist not so much from what Tesco is trying to do but the challenges it faces due to some fundamental differences in the way US Retail Operations are structured in comparison to Europe. Here is an excerpt which I found very interesting
"....In trying to compete with discount retailers such as Wal-Mart and Costco in a large country with good roads and cheap land that lends itself to big-box retailing, America's supermarkets have concentrated mainly on trying to take costs out of their supply chains. Labour is also cheaper in America. This has encouraged supermarkets to make two sorts of food: that which lasts long because it has been dried, canned, frozen or otherwise preserved, and that which is prepared from raw ingredients on site. "

However the preference for organic food and new age stores like The Whole Foods offering a range of pre-cooked food that has a shelf life of a few days, that might be changing.

On the other hand here is the contrast in the environment in which the European retailers compete

"...British supermarkets, in contrast, operate on a small, crowded island with restrictive planning laws. Whereas American stores are good at moving goods hundreds of miles and keeping them cheap, British retailers specialise in regular, frequent deliveries to heaving city-centre stores. Their supply chains are more sophisticated because they have to be. Stores can be so small that they have to switch from selling sandwiches at lunchtime to selling ready-made suppers in the afternoon.
Expensive labour and a shortage of space have encouraged British retailers to seek economies of scale from centralised food preparation. Rather than cooking on site, they make a wide range of meals that can last for a couple of days. These are not just staples such as macaroni cheese or lasagne. A typical London supermarket now stocks more than 50 different meals, including treats such as organic beef in wine, Keralan prawn curry and Asian noodles with vegetables. "

Bloody interesting ainhhh!!!!!!

Thursday, September 27, 2007

Fitting the profile

I recently read an article on an Economist article talking about a very smart algorithm written for Tesco to classify their wide assortments of items based on their loyalty customer behavior. Tim Manner (of has given a good explanation of what it essentially does. The classifications drive the determination of what promotional material gets mailed to you. How many of us have got absolutely mindless coupon/mailers show up at our homes week after week. I would be delighted the day something useful shows up at my house that I am genuinely interested in. I think the sender would command some kind of brand loyalty from me. On the other hand I wont be surprised if the brand image takes a beating if they keep sending useless stuff. One company that has consistently impressed me in terms of presenting the right items through email and their website is Amazon. Wonder what algorithm they use!!!!

Beginning of Journey

About a year back I switched my job. From being a professional in the logistics industry who dealt with warehousing and transportation issues, I made a transformation to the world of retail. I had dealt with retail clients earlier but from a distribution point of view, never the bread and butter retail stuff like merchandising, pricing, promotions etc. As I get more exposed to these ideas, I realize what a fascinating and interesting world it is out there. I have started walking into stores a different person. Now my eyes look for holes in the shelves (read stock outs). They look for end-caps crammed with irrelevant stuff. They get delighted at a well posted signage. With this blog I hope to chart new areas of retail and share my experiences and hope to learn from fellow bloggers. And what a time to start - right before holiday season when virtually all retailers are getting stocked up as item seasonalities come into play and the challenge to make the most before the year closes!!!!
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