tornado effect in retail: leveraging constant innovation for growth

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED

DOUGLAS M. SMITH - CHIEF INNOVATOR


APPLE STORE LAUNCHES IN CONVENT GARDEN

WITH QUEUES AROUND THE BLOCK


RETAILERS LIKE APPLE ARE LEVERAGING

TORNADO EFFECTS TO CROSS THE CHASM TO REACH THE HOLY GRAIL OF LIFE INSIDE THE TORNADO

TECHNOLOGY ADOPTION CURVE APPLIES TO RETAIL

CHASM

TORNADO

BOWLING ALLEY

(FOCUSING)

BOWLING ALLEY

(FOCUSING)

MAINSTREET

(CONCEPT MAINSTREAMS)

FULL ADOPTION

EARLY MOVERS


HOW WE KNOW THESE TORNADO EFFECTS EXIST?


BLOCKBUSTER, KILLED BY COMPLACENCY

WHILE RIVAL NETFLIX INNOVATES AROUND CUSTOMERS.

Photo by The Consumerist


Will Rogers 1879-1935

“Even if you’re on the right track, you’ll get run over if you just sit there.”


"Shoppers are tuning out. Worse, they are

exhausted by their shopping experience

when they should be energized. That's what

happens when you force shoppers to think about

getting low prices when what they want is to feel

good about what they're buying. "

Al Wittemen - MD Retail strategy, Advantage Retail

THE TRAIN IS COMING


SHOPPERS DON’T LOVE SHOPPING

• pushy or over-enthusiastic staff

• music being played too loudly

• having to queue

• battling with crowds

52%

Source: Mintel research

I hate…


SHOPPER SATISFACTION DECLINING ± 15% / YR*

• arrogant and nasty salespeople

• communal changing rooms - even among teenagers

• paying a small fortune for something that will go out of fashion

Source: *IPG Media Lab & Mintel research

I hate…


TYPICAL SHOPPER GOES THROUGH

THE BIG DIP

OptimismAnticipation

Hope

PessimismFrustration

Irritation

Initial enthusiasm

The process of buying

Getting the product

(if you’re lucky)


Retail Sales Index (3 months on previous 3 months %)

Chart to compare 1st estimate with 12 months later

-1.5

-1

-0.5

0

0.5

1

1.5

2

2.5

Mar -04 Sep- 04 Mar-05 Sep- 05 Mar-06 Sep-06 Mar -07 Sep- 07 Mar-08 Sep-08

First Estimate Value 12 Months laterPercentRETAIL SALES INDEX

(3 mo. on 3 mo. %)

RESULTING IN NEGLIGIBLE GROWTH

LOW GROWTH IS HERE TO STAY

“The market scraped marginal growth in 2009 and I

see a low growth environment as here to stay. The

combination of a weak economic outlook and a changing

consumer means the industry is at a key inflection point as

it re-aligns itself to a new reality. What growth there

is will be absorbed by online. Like-for-like sales

will thus dip in and out of negative territory on a monthly

basis.” - Helen Dickinson, KPMG

Source: KPMG/Synovate Retail Think Tank Whitepaper, Feb 2010Published by the

BRITISH RETAIL CONSORTIUM

MEANWHILE…

2006 2007 2008 2009 2010 2011

$406.8

$357.4

$307.1

$255.7

$196.9

$132.9

(37.2%)

(28%)

(25.6%)

(20%)

(15.6%)

B2C E-COMMERCE SALES* IN EUROPE** 2006-2011

(billions USD and %increase vs. prior year)

Source: eMarketer*includes online travel, event ticket and digital download sales; **includes Austria, Belgium, Denmark, France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, Switzerland and the UK

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVEDSource: Forrester Research Inc. Report, “ U.S. Online

Retail Forecast, 2009 to 2014”

2.5%

11%TOTAL PREDICTED E-RETAIL GROWTH IN 2010

10%/YREST. GROWTH OVER NEXT 5 YEARS

VALUE OF E-RETAIL IN 2014 WILL TOTAL $249 BILLION.

PREDICTED TOTAL US RETAIL GROWTH IN 2010


$1,409,000,000

= 53% OF ALL RETAIL SALES

VALUE OF US SALES INFLUENCED BY THE WEB BY 2014

Source: Forrester Research Inc. Report, “ U.S. Online

Retail Forecast, 2009 to 2014”


ONLINE VS. HIGH STREET

Experience

Better choice

Time savings / convenience

Empowerment

Customer Service

E-RETAIL

HIGH

STREET

SHOPPERS LIVE IN

TWO DIFFERENT

WORLDS


© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED Source: Interbrand Top 50 Retail Brands

SOME BRANDS ARE SHOWING

THE WAY FORWARD


FIRST RETAILER TO ELIMINATE COMMISSIONS

EARLY MULTI-CHANNEL ADOPTER

Source: BEST BUY ANNUAL REPORT


NOW INNOVATES AROUND CUSTOMER INSIGHTS

Source: BEST BUY ANNUAL REPORT


CREATED LIVING ROOMS TO SHOWCASE EQUIPMENT

BASED ON INSIGHTS INTO FEMALE BUYERS


CREATED GEEK SQUADS

BASED ON INSIGHTS INTO DIFFICULTIES CUSTOMERS HAVE WITH TECH.

GEEK SQUAD NERDY ATTIRE IS INSTANTLY

RECOGNIZABLE

TURNING BLAND EXPERIENCES

INTO SOMETHING MEMORABLE

SERVICES 6% OF

DOMESTIC REVENUE=+

CUSTOMER CENTRIC INNOVATIONS

IS FUELING GROWTH

NATIONALLY AND INTERNATIONALLY


THE TORNADO EFFECT IN RETAIL

1. LEVERAGE CONSTANT AND RAPID INNOVATION

2. THINK OUTSIDE THE BOX

3. TAKE RISK

4. FAILURE LEADS TO SUCCESS

5. FOCUS ON THE CUSTOMER, NOT SALES



Kakushin


Katsuaki Watanabe IN A 2006 INTERVIEW

WITH THE WALL STREET JOURNAL

“KAIZEN IS OUT. KAKUSIN IS IN.”


SHAPES WHAT HAPPENS INSIDE THE FUNNEL


THE NEW CUSTOMER

JOURNEY INSIDE A

TORNADO EFFECT

DRIVEN FUNNEL


ENGAGE


MOST CAMPAIGNS FAIL IN-STORE

DESPITE DOING WELL ONLINE AND OFF


OUR OBJECTIVE NEEDS TO BE

TO REVERSE THE BIG DIP

“I’ve bought it!”

“I’m going somewhere else, or not buying at all”

OptimismAnticipation

Hope

PessimismFrustration

Irritation


ENGAGE >BE INTEGRATED


WHEN YOU DO A CAMPAIGN ONLINE, MAKE IT LIVE IN RETAIL.

CONTINUE THE JOURNEY AND THE CONVERSATIONS.

!WATCH HEREhttp://www.youtube.com/watch?v=Ojx2wVWlx-0


ENGAGE >BE INTEGRATED>BE SURPRISING


LEVERAGE DIGITAL ENABLED WINDOW DISPLAYS

TO SURPRISE & DELIGHT

!WATCH HEREhttp://www.youtube.com/watch?v=qN0PkWRj_Hs


USE CEILINGS AND WALLS TO TURN EVERY

SPACE INTO SOMETHING UNIQUE

Courtesy of THE EMBRYO STUDIO


ENGAGE >BE INTEGRATED>BE SURPRISING

>BE SMART


THINK LIKE A HAIRDRESSER

KNOW YOUR CUSTOMER & WHAT

THEY LIKE TO EARN STRONG LOYALTY


SALON PLAN B IN CAMBRIDGE, MA. HOLDS 15 MIN.

SKYPE CALLS WITH CUSTOMERS BEFORE THEY VISIT


ADIDAS miCOACH TAKES

YOUR TRAINING DATA IN-STORE


FOR A PERSONAL SHOPPING EXPERIENCE


ADIDAS mi INNOVATION GOES FURTHER WITH AN

INSTORE DIGITAL RUNNING TRACK


CONCEPT STORES NOW 43% OF ADIDAS RETAIL

SALES AND 50+% OF ALL STORE FORMATS!


EXCITEENGAGE


EXCITE >BE REMARKABLE


50%

APPLE RETAIL’S SPACE FOR KNOWLEDGE & SERVICE


• NO COMMISSIONS

• TEAM BONUSES

• FOCUS ON THE EXPERIENCE

• HIRE FOR PERSONALITY, ATTITUDE

AND CUSTOMER FIT. TRAIN THE

REST

• 3 WEEK IMMERSION ONLY ON

CUSTOMER RELATIONSHIP SKILLS

AND UNDERSTANDING CUSTOMER

NEEDS/LIFESTYLE

• ALL PRODUCT TRAINING ONLINE

(EXCEPT GENIUSES)

APPLE RE-THINKS RETAIL JOBS


Apple Retail 2001

Sorry Steve, Apple Stores Won’t Work

(Business Week)

Apple Retail 2004:

Fastest retailer ever to reach the

$1 billion mark a year

Apple Retail 2006

Fastest retailer ever to reach

$1 billion/quarter mark

Apple Retail 2007

Sales per sq.meter = $ 30,176

(as comparison: BestBuy = $10,643)

AND GET’S RECORD-BREAKING RESULTS!


ADIDAS JAPANESE STORE IS MORE THAN A STORE

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVEDRUN!RENTDESIGNLEARN

SHOWERCHANGE

IT’S A PLACE TO…


DISNEY IS TURNING ITS STORES INTO “IMAGINATION PARKS”

DISNEY IS TURNING ITS STORES INTO

“IMAGINATION PARKS,”


WHERE KIDS CAN CUSTOMIZE

THEIR OWN CARS TOYS,


PLAY IN MAGIC CASTLES,


CREATE

CHARACTERS

WITH A WAVE OF

A WAND,


AND ENJOY

THEATRE ALL

DAY LONG.


EXCITE >BE REMARKABLE>BE CONSISTENT


ADDING FUN BACK INTO HAMLEY’S ADDING FUN BACK INTO HAMLEY’S


WHERE IT’S OKAY TO PLAY

ACTORS HIRED TO INVITE PEOPLE TO TO PLAY


AND PARTY WITH THE STAFF IN THEME

DAYS AND PARTIES

AND PARTY WITH THE STAFF IN THEME DAYS & PARTIES.


£100K PROFIT FIRST QUARTER! SALES UP 5%


EXCITE >BE REMARKABLE>BE CONSISTENT

>BE RELEVANT


A SPORTS STORE THAT BRINGS THE

OUTSIDE IN

FEATURING CLIMBING WALLS, MOUNTAIN BIKE TRACKS, RAIN CHAMBERS FOR TESTING WET-WEATHER GEAR, FISHING PONDS, ARCHERY RANGES & PUTTING GREENS


HMV CONNECTS WITH GAMERS

CREATES GAMERBASE


AND ‘GETS CLOSER’ TO AN INSTANT COMMUNITY.


FRENCH MOBILE RETAILER MIXES

MUSIC AND PHONES


WITH LIVE CONCERTS AND PLACES TO

DOWNLOAD AND LISTEN TO MUSIC.


EMPOWEREXCITEENGAGE


EMPOWER >GIVE CONTROL


MOBILE APPS LIKE SHOPSAVVY EMPOWER SHOPPERS TO SCAN PRODUCT BAR CODES AND FIND CHEAPER PLACES TO BUY GOODS

DOWNLOADED BY 4.5 MILLION USERS & 1 MILLION BAR CODES SCANNED DAILY.


MIELE IN VIANEN CREATES REACTIVE DISPLAYS

TAILORED TO YOUR PREFERENCES


GROWING USE IN FASHION (DIESEL STORE, GINZA)


PRODUCING STRONG RESULTS

MITSUKOSHI BUSINESS RESULTS

90% customer satisfaction

25% savings in staff time

15.8% increase in sales

revenue over previous year



>BE CONVENIENT


A KIOSK OR MOBILE STORE ALLOWS SHOPPERS TO

PURCHASE STOCK THAT’S IN THE E-STORE


OPTIMUS LETS SHOPPERS CONFIGURE THEIR PHONE

ON THE SPOT WITH FILMS, MUSIC, GAMES.

SOURCE: DISPLAX

!WATCH HERE http://www.youtube.com/watch?v=Pt2xt7914f4

http://www.youtube.com/watch?v=Pt2xt7914f4

http://www.youtube.com/watch?v=Pt2xt7914f4


ANYTHING CAN BE VENDED.

FORGOT YOUR IPOD? BUY ONE HERE.


WHO NEEDS A CONVENIENCE STORE

WHEN YOU HAVE ONE OF THESE.


DON’T FORGET TO BUY THAT LUXURY COSMETIC


OR A PAIR OF SNEAKERS

THE NEXT TIME YOU’RE BAREFOOTED ON CARNABY LANE.


OR EVEN A PAIR OF JEANS.


HOW ABOUT 64 VARIETIES OF FRESH ICE-CREAM

MIXED FRESH IN THIS $15 MILLION MACHINE


AND YES YOU CAN EVEN BUY A CAR.

NOT THIS ONE, IT’S A CAMPAIGN.


BUT THE MORGAN HOTEL’S VENDING SHOP,

WILL SELL YOU A BENTLEY.



>BE CONVENIENT>BE CONNECTED


BLOOMINGDALE’S

DRESSING ROOM

MIRROR LETS YOU

FACEBOOK

FASHION WITH

FRIENDS


21 MILLION CUSTOMER REVIEWS & COUNTING

21 MILLION CUSTOMER REVIEWS & COUNTING


WHY DO LOYAL CUSTOMERS PHOTO THEMSELVES

ALL OVER THE WORLD?

MOOSEJAW PUTS CUSTOMERS AT THE CENTER.


!WATCH HERE http://www.youtube.com/watch?v=fnkDt5xq2M4

IN FACT, THERE’S NOT MUCH THEY

WON’T DO FOR YOU


WHICH IS WHY THEY INTEGRATED THEIR WEBSITE,

MOBILE & POINT OF SALE SYSTEMS…

TO PROVIDE A SEAMLESS SHOPPING EXPERIENCE.


THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, HAVE

FUN NO MATTER WHERE YOU ARE

THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, &

HAVE FUN NO MATTER WHERE YOU ARE.


Increase in conversions:

3 to 4%

Increase in sales:

+10%

Increase in items sold/visit

1.9 to 2.5

OH, AND IT DOES GIVE GOOD RESULTS TOO


TORNADO EFFECT RETAILERS ARE

DRAMATICALLY CHANGING THE

GAME AND GIVING SHOPPERS

WHAT THEY WANT:

A GREAT SHOPPING EXPERIENCE

WHERE THE CUSTOMER IS IN

CONTROL.

PROCESS

1. KNOW YOUR CUSTOMER

2. IDENTIFY KEY DECISION POINTS WITHIN

YOUR STORE. THESE ARE KEY IN-STORE

CONVERSION MOMENTS.

3. SET YOUR BENCHMARKS

4. PLAN YOUR STORE EXPERIENCE

AROUND THE CUSTOMER

5. DESIGN YOUR STORE INTERACTIONS TO

EXCITE, ENGAGE AND EMPOWER

6. TEST AND REFINE YOUR APPROACH

7. MEASURE THE RESULTS



READY TO CREATE YOUR OWN TORNADO EFFECT?

[email protected]

CALL NOW: +44 772 4 03 91 68

tornado effect in retail: leveraging constant innovation for growth

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