Posts Tagged ‘Retail’

Edition 10: Good Food and Wine

Friday, July 16th, 2010

The Good Food and Wine Show opens at Darling Harbour Exhibition Centre today, Friday July 16. We talk with James Laing, Group Exhibition Director of Diversified Exhibitions and the man in charge of this nationally renowned expo of the country’s top gourmand producers and growers, celebrity chefs, quaffable wines and obscure seasonings.

Now in its 9th year, the Good Food and Wine Show has tracked the explosion in interest in what we eat and drink in Australia, riding the wave of fascination in down to earth cooking techniques and as gourmet trends, to become one of the country’s largest consumer exhibitions. Opening across Melbourne, Sydney, Perth, Brisbane and Adelaide the Show welcomes 140,000 people through its doors each year, exposing them to new ideas for their kitchens and teaching them new techniques. The business is growing every year and James discusses the dynamics of managing a challenging consumer venture in a booming industry.

Accessible tourism: linking demographic change and social sustainability to business success

Thursday, April 29th, 2010

Cities and organisations have responsibilities for citizens of all abilities. Associate Professor Simon Darcy asks, how can spaces, places and experiences be framed to provide an equality of experience?

The United Nations’ Convention on the Rights of Persons with Disabilities guarantees people with disabilities access to all areas of citizenship. The 650 million people with disabilities and estimated 1.2 billion people over the age of 60 by 2020 are both a significant challenge and market opportunity for cities and service industries.

I led a research team in the Visitor Accessibility in Urban Centres project funded by the Cooperative Research Centre for Sustainable Tourism.

The research focused on accessible tourism – covering visitors with mobility, vision or hearing impairments or learning difficulties – who are estimated in the report to account for 11% of the total tourism spend in Australia.

The motivation behind the study was to discover the quintessential experiences of Sydney, as the national tourism gateway, from the point of view of the accessible tourism market.

The findings have been broad-ranging with the potential to be ground breaking. The research looked not simply at what accessible tourists ‘can’ or ‘can’t do’, but at the quality of experience they have when they do their tourist thing in and around Sydney’s central business district, Rocks area and Harbour foreshore.The aim was to create a process incorporating universal design and inclusive practice for developing information, marketing and promotion approaches that would provide tourists with access needs with a framework to make informed choices for their tourism intineries.

The project was based on a participatory action approach that worked with major industry stakeholders and service providers to identify what first rate accessible experiences existed and to create an understanding that these are valuable offerings to travelers with access needs.

Many of the service providers had not considered tourism as a component of their operations. What was exciting about this study was that no new accessible experiences were created for the project, instead all the experiences identified were already occurring within the stakeholder and service provider operations, and needed to the reframed within an accessible tourism context and collaboratively marketed.

Accessible tourism is about access for tourists with a range of impairments, from the most readily recognizable needs of wheelchair users for continuous pathways to attractions, way-finding routes and so forth, to alternative communication strategies for people with vision and hearing impairments. Strategies that benefit people with disabilities often translate into benefits for other sectors of the community including people from non-English-speaking backgrounds, families with children in prams and employees who require safer working environments.

The starting point of the study was to consider what would any tourist visiting Sydney want to experience: the views, the Manly Ferry, fish and chips by the water, a sense of the history of the original colony, perhaps. The restricted starting point of what people with disabilities can or can’t do was ignored. After all, few tourists want a list of do’s and don’ts. They want accurate information to enable informed decisions about how to enjoy the city they are visiting. The accessible building blocks of any trip were brought together – transport providers, wayfinding maps, toilet locations – so that planning could be done in the one the virtual location.

The next step involved discovering 20 accessible destination experiences that could be used for tourists with access needs. The Art Gallery of New South Wales’ popular monthly Auslan (Australian sign language) interpreted after-hours gallery tour, allows hearing impaired visitors to engage with the guides and the venue more thoroughly than any written guide ever could; The Royal Botanic Gardens’ Aboriginal Heritage guided tour where people with vision impairments can touch and feel the plants – crush the leaves between their fingers, appeals to an innate desire of many tourists to engage in a sensory experience of a new place, its food, the wine, the song and dance, the aromas.

The report also uncovered opportunities for deeper understanding of the experience of tourists with access needs, and to improve the service offerings. One bugbear, particularly for mobility impaired travellers is finding suitable and enjoyable accommodation.

In Sydney, a key feature of quality accommodation is a view. Yet in the whole of the Sydney CBD and tourist district, there are currently only four accessible hotel rooms that have a Sydney Harbour view and six with a Black Wattle Bay view. Architects may meet the building requirements by including accessible accommodation, but these are often located in the least attractive part of the hotel – near the delivery dock or loading bay, or over a back lane. Such rooms simply do not provide a quality Sydney experience. One hotel actually converted a room with a view to cater for celebrity wheelchair user Christopher Reeve’s visit in 2003, but converted it back to non-accessible once he had left.

On the other hand, some hotels have understood the opportunities of the accessible tourism market, even catering for cultural differences in what is understood by ‘accessible’ in different parts of the world. Wheelchair users from western cultures are most likely, for example, to expect access to a roll-in shower. In Asian cultures, however, wheelchair users will expect to have a bath, and will look for accommodation with transfer-over baths. Some of the big chains have successfully developed a niche market servicing these customers.

The Visitor Accessibility in Urban Centres report, has a wider application, both in establishing the value of the accessible tourism dollar to the Australian economy through using mainstream economic modeling techniques in conjunction with Professor Larry Dwyer of UNSW. The economic modeling showed that tourists with access needs already accounted for a significant 11% of tourist spending, or $4.8bn. Yet they encountered many constraints to what most other members of the public visiting the city would consider to be essential.

The final aspect of the research was to create the www.sydneyforall.com portal that provides quality information for tourists with access needs looking for accessible destination experiences. The portal also provides opportunities for collaborative marketing and branding activities for the organisations and experience providers. In the 18 months of operation, it has received over 20,000 hits from 110 countries and has received a number of awards for access innovation. The City of Sydney has recently provided a further grant to extend the precinct cover to Darling Harbour and to include an accessible accommodation section.

Ultimately, accessible tourism in Sydney is an issue of equity, economics and citizenship. Quite simply if cities and service providers are not preparing for the ageing of the population and the increasing expectations of people with disabilities, they are not acting in a socially sustainable manner. Dr Darcy’s report argues that in meeting the needs of this significant group of visitors tourism providers can strengthen their business across all market segments and build a niche within a dynamic and ever evolving group of travellers.

Advantage online

Sunday, March 14th, 2010

brandsExclusive, an invitation-only online shopping boutique, demonstrates how important strategic planning and careful thinking is for e-commerce success, reports Dr Lars Groeger.

Niche Australian boutique brandsExclusive sells fashion clothing, accessories and shoes from major fashion labels direct to the public via exclusive online sales events. Running for a limited period with limited stock availability, these sales events allow invitation-only members to save up to 70 percent off recommended retail prices. Members do not pay fees, while non-members are unable to access or buy from the website.

This highly successful website is the brainchild of founders Daniel Jarosch and Rolf Weber, who anticipated consumers’ need to buy genuine brands from trusted online sources affordably. Both foresaw the development of a revolutionary new distribution channel that would intermediate between brands and consumers. In doing so, they would guarantee intrinsic value for both.

The concept

In 2008, Jarosch and Weber decided to create a website that sold quality products direct from brands at a reduced cost to customers. The pair began to observe the development of highly successful exclusive online shopping clubs in Europe, the first of which was vente-privee.com. The French website subsequently expanded its foothold to Spain, Germany, Italy and the UK by the end of 2008. Its registered European membership grew to 6.5 million, with 2009 revenues soaring to an estimated €510 million [$1 billion].

They tracked other emerging companies including GILT.com, BuyVIP.com, hautelook.com and ruelala.com, which had adopted similar business models to that used by Vente Privee. As their ingenuity increased, some sites were able to match their French rival’s revenues in an even shorter period of time. Colossally successful German-based Brands4friends.de, for example, broke even in just six months and generated revenues of €30 million [$50 million] in its first year.

All the sites had an identical guiding principle: to fulfil apparel brands’ desire to sell excess stock quickly – without harming their image or forcing the website to compete against rival distribution channels.

Despite opportunities for success, as many online shopping clubs have failed as have succeeded. The online apparel market did not develop as successfully as expected and many players vanished as quickly as they appeared. The Financial Times referred to boo.com as ‘the highest-profile casualty among European e-tailing start-ups’ after the brand spent $135 million of venture capitalists’ money in 18 months but attracted dismal customer numbers.

The appeal for fashion manufacturers

Sustaining exclusivity is of utmost importance to fashion manufacturers. So much so that they often destroy their own goods if faced with the threat of jeopardising their premium image by having them relegated to bargain bins.

To sidestep this dilemma, a number of manufacturers had tried to bypass retailers by selling products directly to customers over the internet. Issues arose, however, as new online channels competed with traditional channels by selling to the same markets. A case in point is Levi Strauss & Co, a highly successful US apparel business that audaciously began selling its Levi and Dockers brands online in 1999. Retailers were flummoxed by the assault of competition, advising that Levi’s account could be cancelled if the company continued to sell its products direct to consumers online. Within a few months, Levi Strauss & Co had discontinued all online advertising efforts.

The Australian climate

Coco Chanel coined the phrase ‘fashion is made to become unfashionable’, underlining the unnerving unpredictability of the apparel industry. Yet despite its apparent volatility, the Australian retail apparel industry has moved from strength to strength, boasting a weighty turnover of $12.8 billion in 2008. A substantial share of this is assigned to overstock or season stock, providing an outstanding business opportunity for brandsExclusive to sell this inventory online as opposed to selling through classic channels such as DFO and warehouse sales.

Jarosch and Weber defined their customer base as those seeking genuine branded goods at a high discount from a trusted online source. Weber felt the business model didn’t necessarily need to be limited to overstock products in apparel – or to the apparel category itself. ‘It will eventually evolve as we see what’s happening overseas. This means the opportunity increases accordingly, with more available stock and categories added depending on the preferences and needs of the consumers.’

Despite Jarosch and Weber’s high hopes for success in the Australian market, the fact remained that only one Australian online retailer (ozsale.com.au) was taking a similar approach to Europe’s online clubs at the time of brandsExclusive’s inception. OzSale had launched in 2007, focusing on children’s wear and offering a self-registration membership strategy. In contrast to brandsExclusive, OzSale did not work with local brands but focused on bulk buying of liquidation stock overseas and importing it to Australia.

In contrast to those in the US and UK, the online market in Australia is still in its infancy, and this relates to two critical factors. Firstly, a large proportion of Australian consumers are wary of online shopping. Online transactions have attracted a moderate-to-high number of complaints, which has undermined consumer confidence and fostered e-consumers’ fears of falling prey to credit-card fraud. Secondly, experts cite the lack of a ‘catalogue-shopping culture’ as further cause for consumer hesitancy.

Jarosch and Weber’s venture would play directly into the hands of either the prosperity or the demise of the Australian online shopping market. The pair was plagued by a pressing question: that of whether or not a successful overseas business model could be transferred and adapted to the Australian continent, given the relative online inexperience of the country’s consumers.

The inherent challenges

Pure retailers face relatively few barriers to establishing online outfits; however, the combination of low capital requirements and the broad and large market opportunity outlined above increases the threat of potentially more popular new entrants. Compounding this threat is the fact that new competitors are a click away for consumers, making loyalty and trust far more difficult to obtain and maintain within the web environment.

Another issue lies in the difficulty consumers have in accurately assessing products online. The characteristics pivotal to the consumer decision-making process – colour, touch, feel and fit – present particular communication challenges in this arena. Customers are also stripped of the instant gratification their purchases can provide, as a shopaholic’s joy must be postponed until the goods arrive in the mailbox. Product presentation and website atmosphere are therefore critical factors in evoking positive consumer emotions.

To get around this potentially problematic issue, brandsExclusive placed considerable importance on the presentation of its online products. It created a quasi-3D effect by using human models instead of laying out the goods in one-dimensional form and provided detailed descriptions of model height, weight and size to further illuminate the assets of its product. In addition, they provided pictures of the products, taken from several angles, along with a high-resolution zoom function.

The venture’s dominion

The success of brandsExclusive boils down to its ability to sidestep the hesitancy of Australian consumers to shop online by establishing strong transactional trust. To rid any lingering uncertainty from the minds of online customers who may be unfamiliar with unconventional shopping channels, brandsExclusive offers a full return policy.

In addition, the business sources its stock directly from fashion brands and their distributors in Australia instead of sourcing branded goods from China, the US or via receivership goods.

This sourcing strategy differentiates brandsExclusive from other players, who may pay less by purchasing goods in higher volumes from several sources.

By contrast, brandsExclusive only orders the aggregated consumer demand at the end of the sales event. While this ordering process means longer waiting periods for the consumer, it mitigates inventory and cash flow risks by disentangling cash flow from inventory. It also boosts consumer trust by guaranteeing quality.

brandsExclusive further builds consumer trust by consistently guaranteeing high price discounts. In contrast to rival online companies, the business holds no inventory and therefore avoids warehousing and personnel costs. Meanwhile, online marketing costs are kept to a minimum, thanks to its invitation-only membership approach and a concentration on email announcements to members and personalised customer relationship management. Satisfied members spread news about the shopping club on behalf of the firm and, in doing so, provide brandsExclusive with the most powerful marketing tool: word of mouth. To foster member referrals, brandsExclusive provides a range of invitation applications from which members can choose, such as address-book uploads, Facebook integration and MSN messenger invitations applications.

But brandsExclusive’s success also lies in its ability to build trust with fashion brands themselves. It gives brands access to a proven online retail channel without extra costs or risks. This enables the supplier to generate high sales volume through fast clearance of excess inventory. It also avoids channel conflict because goods are sold to a new, exclusive and closed customer base.

The website also protects the identity of fashion brands by removing former campaigns from the site, leaving no trace of their existence. Neither can its sales be sourced within Google searches. The brand thus retains tight control and benefits from cross-selling via other channels, given that the exclusivity and short length of brandsExclusive sales events mean that members may miss buying what they wanted.

Along with the development of trust in consumers and suppliers, the success of brandsExclusive lies in its ability to provide customers with access to a thrilling buying experience. Not only does buying through the site guarantee hefty discounts; it also ensures that each sales event is exclusive, running only for a limited time and providing a limited quantity of merchandise.

With a growing sense of haste in people’s lives, there’s an increasing desire to buy from retailers that capture – or capitalise on – fleeting experiences.

The indomitable outlook

Jarosch and Weber are focusing on two key areas: growing the site’s membership and supplying members with a wide and deep range of products. The pair’s current objective is to increase membership to more than 100,000 in the first year and be showcasing between 25 and 50 sales campaigns a month, while maintaining a high conversion rate.

As predicted by Jarosch, other private shopping club operations have emerged in Australia as a result of his business model’s success. This is no surprise, as venture capitalists are eager to invest in the latest trends, driving up valuations and encouraging a glut of copycats.

But while the onslaught of competitors could spoil the party, The Wall Street Journal had it right in July 2009 when it noted that the importance of strategic planning for e-commerce firms cannot be overstated – and will eventually guarantee a sustainable competitive advantage.

This case study is extracted from the forthcoming book, Strategy: Theory and Practice, by Stewart Clegg, Chris Carter, Martin Kornberger and Jochen Schweitzer.

How can choice theory help wine marketers?

Friday, September 4th, 2009

A three-year study of consumers’ wine choices with a budget of over a million dollars looks set to tell us that our wine selection, like so much of our behaviour, can be profiled, modelled and predicted in advance. Professor Richard Carson and Professor Jordan Louviere explain how.

Wine choice is one of those things that can feel very personal, spontaneous, even whimsical. You choose a wine to match the meal or in memory of a particular drop on a balmy summer evening, or perhaps again, you are a connoisseur, your choices informed by a well-trained palate or by dedicated study.

Wrong. A three-year study of consumers’ wine choices with a research budget of over a million dollars looks set to tell us that our wine selection, like so much of our consumer behaviour, can be profiled, modelled and predicted in advance.

According to Jordan Louviere, Executive Director of the Centre for the Study of Choice (CenSoC) at UTS, choice modelling can predict wine purchasing decisions by profiling consumers by age, gender, suburb, industry. A proof of concept for the study carried out in Australia in 2008 compared the results of profiling wine buying decisions of 2000 people in New South Wales against AC Neilson’s data on actual wine purchases. The results were remarkably accurate.

The project is a joint research venture between CenSoC and the Ehrenberg-Bass Institute for Marketing Science, University of South Australia, under the auspices of the Grape and Wine Research and Development Corporation. The brief is to predict the demand for  new and emerging wines, for new and emerging markets.

Once completed, the findings have the potential to assist Australian wine producers to understand how best to maximise sales to their global customer base by a deeper understanding of the wine-buying consumer, and by targeting the product and the purchasing experience appropriately.

The CenSoC study seeks to combine the disciplines of economics and psychology, statistics, marketing, and sensory science – basic wine chemistry and sensory judgment by trained tasters. Results from the proof of concept test in Australia show promise for achieving that goal, but there were too few wines studied (twenty-one in total) to provide reliable results at this point. It is anticipated that the series of integrated findings from the full study will allow wine producers to understand consumer choices across a range of features – from the bottle’s physical features, to the environment and supporting information at the point of sale, linked with chemical attributes of the wine, such as sugar content and alcohol level.

There are three facets to the research. First is a series of discrete choice experiments. Received wisdom in the wine industry has long held that consumers are influenced by bottle shape and label design – producers and wine marketers invest millions of dollars to get these right. Yet traditional yes/no surveys of wine preference suggest that labels are irrelevant to the wines people choose.

CenSoC decided to tackle the issue from scratch: “We have developed sophisticated multi-media technology to manipulate bottle shape, size, colour, around twenty-five features of a wine’s packaging in all. Sure enough, different combinations of these features do have an impact on people purchasing decisions. Labels do matter,” explains Professor Richard Carson, Professor of Economics at CenSoC and consultant to the project.

The second facet of the research is to examine the in-store purchasing experience to see how this affects purchasing decisions. Variables such as information about the wine, shelf labelling and organisation, expert evaluations, ratings and awards, are tested. The results so far suggest that when people are a given hypothetical store experience, their choices are similar to the ones they make in normal retail environments.

The third is sensory testing. This includes chemical analysis of the wine, as well as expert evaluation by a trained panel, and widespread consumer tasting. For the 2008 proof of concept of the research project, testing was run in conjunction with taste testing by the Australian Wine Research Institute. To Jordan Louviere, the results are promising. “Although the sample tested for the proof of concept is small, the results are promising, and it looks like we might be able to link the amount of acidity in the wine and the amount of sugar in the wine as measured through chemical testing directly to wine choices.”

CenSoC believes it can combine the results of this multi-dimensional consumer research to predict with some reliability what wine people will buy, and which people will buy it. By running the tests in the different global and domestic markets for Australian wines, producers will, in theory at least, be able to predict purchasing patterns, and produce their wine in such a way as to best maximise sales.

Currently, responses from thousands of people in Chicago and in Tampa in the US are being collated, to provide data on how to configure wine to maximise the chance for success in the US market.

This is a timely study. The past two financial years have seen significant falls for Australian wine exports in key markets of North America and Great Britain. This may just be the tool to set those sales figures straight once more.

Top management teams

Wednesday, April 15th, 2009

The top management team plays a pivotal role in strategy; pushing a strategic agenda from above or cultivating one from the bottom-up. In this video Roger Corbett, an Executive Director with several blue-chip firms and former CEO of Woolworths, discusses the strategic role of top management teams and shares his decades-long experience with strategy and decision-making from the shop floor to the boardroom.

Watch the full video above, or skip to selected chapters below.

Roger describes his extraordinary career in the Australian retail industry; from shop floor to CEO of Australia’s biggest retailer.

Facts, the numbers, risk and entrepreneurship; Roger provides a clear description of strategy in practice.

The roles, responsibilities, obligations and separation of powers are explained in this insightful chapter on the machinations of boards and management.

Based on his 45-year career in the retail industry, Roger gives a unique perspective on what leadership really means.

In a powerful final chapter, Roger provides his advice for future generations of careerists.