© Dionco Inc. 2008

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What Darwin Really SaidWhat Darwin Really Said……

““It is not the strongest species It is not the strongest species that survive, not the most that survive, not the most

intelligent but the ones most intelligent but the ones most responsive to changeresponsive to change””

(Charles Darwin)(Charles Darwin)

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Source: Hug Your Customers – Jack Mitchel CEO Mitchel/Richards

Customers Are Raising The BarCustomers Are Raising The Bar

What rated a 10 in 1998 is a 7 in 2008 and a 3 in 2018.What rated a 10 in 1998 is a 7 in 2008 and a 3 in 2018.What rated a 10 in 2008 is a 7 in 2018.What rated a 10 in 2008 is a 7 in 2018.

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19981998 20082008 20182018

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The Customer Of Today Is Not The Customer Of Today Is Not The Customer Of YesterdayThe Customer Of Yesterday

They are increasingly:Fragmented & unpredictable Sophisticated yet local oriented Time poorTime poorBetter educated, skeptical, cynical & demandingBetter educated, skeptical, cynical & demandingLess polite, quick to complain and slow to forgiveHave a more “relaxed” moralityDon’t trust companies, stores, staff or each other!Have more information and choices available to themWant it fast, now and cheap or a really exciting product/experiencereally exciting product/experience – not much in between Short term Hedonism is replacing long term HedonismLess loyal?Less loyal?

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Look In The Mirror!Look In The Mirror!

Retailers are less loyal to customers Retailers are less loyal to customers Also are less loyal and give less latitude to their staffAre often driven by short term gain and not long term strategy (blame Wall Street)Value speed of decisions & execution over accuracy

Topic Percent

Employees don’t know/care 21%

Understaffed 21%

Bad customer service 20%

Rude employees 19%

Staff no help 19%

Cannot find help 15%

Store policies 10%

Hires low pay/benefits staff 9%

Store presentation 2%

Expensive 1%

Other 21%

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Customers See The Same Customers See The Same ReflectionReflection

Pricing did not top the listNor did out-of-stocks Or, product complexity

Stores Magazine - June 2007 BIG Research

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Customers Shop Horizontally Customers Shop Horizontally

Who Is Setting Your Customers' Who Is Setting Your Customers' Expectations? Expectations?

Them! Them! Them! Them!

Definitely, NOT ThemDefinitely, NOT Them! ! 8

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Every Industry Has Its Own Every Industry Has Its Own ‘‘Innovation CompetenceInnovation Competence’’

"By bringing the msnbc.com experience offline to create a news-infused café, we’ve created a digital playground

where consumers can engage and experiment with news in unconventional ways." msnbc.com

"By bringing the "By bringing the msnbc.commsnbc.com experience offline to create a experience offline to create a newsnews--infused cafinfused caféé, we, we’’ve created a digital playground ve created a digital playground

where consumers can engage and experiment with news where consumers can engage and experiment with news in unconventional ways." in unconventional ways." msnbc.commsnbc.com

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Because The Light At The End Of Because The Light At The End Of An (Industry) Tunnel IsAn (Industry) Tunnel Is……

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Expectation EconomyExpectation Economy“It is an economy inhabited by EXPERIENCED, WELL-INFORMED consumers who have a long list of high a long list of high expectationsexpectations that they apply to each and every good, service and experience offered”

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Effect Of The Expectation Effect Of The Expectation Economy On ConsumersEconomy On Consumers’’ MoodMood

IRRITATIONIRRITATION - when they are forced to buy from an underperforming brand because they can’t get the best of the best (your your store/product/brand is just as bad as everyone elsestore/product/brand is just as bad as everyone else’’ss)INDIFFERENCEINDIFFERENCE - when they know your brand is underperforming and instead of giving you feedback, they leave and never return (you are you are just plain bad and deserve to failjust plain bad and deserve to fail)

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How Do You Avoid It?How Do You Avoid It?

Not this! Not this!

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But RatherBut Rather……In economies of abundance it is all about shopping for experience & excitementYou may not be able to own a category, but you can own an experience that will excite your customers

From This From This To This To This

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Best Experience RetailersBest Experience Retailers

$1.25 $4.00

vs.

•Third-place positioning •55,000 unique beverage combinations ••More than 16,000 coffee shops in more More than 16,000 coffee shops in more than 35 countries than 35 countries ••The consumer never needs to go out of The consumer never needs to go out of their waytheir way•Nearly 1,000 visitors per location per day••Commanding a premium for a Commanding a premium for a commoditycommodity

•$4,491 avg. sales per sq. ft. (Best Buy: $929) (FY07)•New standards in customer experience •Genius Bar•Free education programs••Unlimited product accessUnlimited product access••No products are under glassNo products are under glass••Customers can Customers can ““test drivetest drive”” new productsnew products•Moving beyond computers

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Best Experience RetailersBest Experience Retailers• Abt Electronics (Chicago Far Northwest Side)•• The The ““BellagioBellagio”” of Retail of Retail • 1 Store (350,000 sq. ft. showroom + warehouse) • $360M+ sales• Store-within-a-store concept - Apple, Sony, Bang & Olufsen and Sub-Zero• Present products in a simulated lifestyle environment • 5 million 22,000-square-foot design center leased to vendors • Customer’s lure is completeness….It's not going to be a wasted trip • One-store mentality

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ItIt’’s All About The Best Of The Best s All About The Best Of The Best & Upgrade Anything& Upgrade Anything

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Architecture Is Leading The WayArchitecture Is Leading The WayCentral Chinese Television Tower

Central Chinese Television Tower Chicago, The Spire

Dubai, The Pad

Another Dubai-esque fantasy: The World

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Self Storage RedesignedSelf Storage Redesigned

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Hotels Have Been Doing It Hotels Have Been Doing It For Some TimeFor Some Time

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Retail Upgrades Retail Upgrades

Tokyo’s Midtown’s ‘mall’ - A multi-shopping destination that appeals to upscale shoppers in 2008 (and as an example of something that will appeal to less upscale shoppers in let’s say 2011, as this kind of luxury is destined to become accessible to the masses a few years later)

Tokyo’s Midtown’s ‘mall’ - A multi-shopping destination that appeals to upscale shoppers in 2008 (and as an example of something that will appeal to less upscale shoppers in let’s say 2011, as this kind of luxury is destined to become accessible to the masses a few years later)

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Retail InnovationRetail Innovation

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AndAnd……Domain Excitement Domain Excitement Consumers' homes will forever be their castles, their cocoons, their most prized possessions, and nothing is going to change that in 2009, or even 2018

Dornbracht RainSky shower system - an electronically

controlled rain module which combines water, mist, light and

scent

Dornbracht RainSky shower system - an electronically

controlled rain module which combines water, mist, light and

scent

Upgrade Your Visuals & Service

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© Dionco Inc. 2008

Create Traffic Stopping Stores Create Traffic Stopping Stores Visuals matterVisuals matterThey help create compelling and distinctive experiencesexperiences for the customer80% of purchases are impulse80% of purchases are impulse, 20% are planned and even a major flooring project can be impulse!Customers make the final decision to buy or not to buy and what to buy in the “last 3 feet”

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Store Layout/Presentation Can Store Layout/Presentation Can Make A + Or Make A + Or –– To Your BusinessTo Your BusinessBy driving trafficBy driving trafficBy improving conversions By improving conversions By increasing sales gains By increasing sales gains A good store layout/presentation allows you to

Sell more to existing customersGet them back more oftenAttract new customersIncrease margins through adding value to your offerKeep the customer in the store longerKeep the customer in the store longer––the longer they stay, the more they buythe longer they stay, the more they buy

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Humans Are VisualHumans Are Visual

Nerve CellsTouch = 400,000Taste = 200,000Hearing = 300,000Smell = 150,000Vision = 260,000,000Vision = 260,000,000

Create ExcitementCreate ExcitementSensory experience of entering a store and be surrounded by light, light, color, texture, and soundcolor, texture, and soundInteractive retail environmentsProduct as a visual toolProduct as a visual toolStores that encourage activity

Displays that lend themselves to action Displays that lend themselves to action (to (to ‘‘test drivetest drive’’ product) and that are product) and that are touchable (think Apple!)touchable (think Apple!)In-store demonstrations

Cafes in stores

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More Than Just ProductsMore Than Just Products

Store environments should incorporate also activism, art, music, culture……

Store Environment & Atmosphere Store Environment & Atmosphere

Are key in creating the perfect customer shopping experience and building loyalty -encourage customers to come back frequently Less a result of the physical environment and more of dynamic store elements dynamic store elements and the product itself

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Elements That Contribute To The Elements That Contribute To The Perfect Shopping ExperiencePerfect Shopping Experience

Atmospherics (graphics; props; music; smell; store literature; using product as a visual tool; videos….)Color personality Customer focusCustomer experienceFocal pointsImpact zoningLayout structureOrientation (signage; layout; directories; product benefits; logical adjacencies; promotional flow)Technology in store Traffic magnetsWindowsBrand enhancement

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Some Examples: Some Examples: Simulated Lifestyle EnvironmentSimulated Lifestyle Environment

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Simulated lifestyle environment Totally detailed room

Simulated lifestyle environment Totally detailed room

Using product as a visual tool Using product as a visual tool

Using product as a visual toolSimulated lifestyle environmentUsing product as a visual tool

Simulated lifestyle environment

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Focal PointsFocal Points

Using product as a visual toolUsing product as a visual tool

Music, Smell, LightMusic, Smell, Light……Or Lack Or Lack Thereof Thereof

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Brand EnhancementBrand Enhancement

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…The cube itself is more like the Kaabat Mecca, proving that Apple is a

religion after all!

…The cube itself is more like the Kaabat Mecca, proving that Apple is a

religion after all!

Focal Points, Customer Focal Points, Customer ExperienceExperience

$22,000 freestanding white and gray marble tub

$22,000 freestanding white and gray marble tub

Large counter whose façade, created from blue agate pressed into resin (from

the Israeli company Majestic Gemstone), glows like a lit-up jewelry case

Large counter whose façade, created from blue agate pressed into resin (from

the Israeli company Majestic Gemstone), glows like a lit-up jewelry case

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And in their washrooms : Renova, the first fashionable toilet paper!.What

cannot be upgraded!

And in their washrooms : Renova, the first fashionable toilet paper!.What

cannot be upgraded!

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Tell A Story: Carnival Of ColorsTell A Story: Carnival Of Colors

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Spring StoryTraffic magnets (and photo op!)

Spring StoryTraffic magnets (and photo op!)

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Tell A Story Tell A Story –– Mosaic Tile DisplayMosaic Tile Display

Story Focal point

Using product as a visual toolTraffic magnets

Story Focal point

Using product as a visual toolTraffic magnets

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A Fish Tank, An Atrium With A Dancing Fountain A Fish Tank, An Atrium With A Dancing Fountain And A Solar Windmill At Abt Electronics And A Solar Windmill At Abt Electronics

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20 ft long, 8 ft tall, 8 ft deep 7,500 gallons of waterTank weighs 8,000 lbs Water in the tank weighs 60,000 lbs

20 ft long, 8 ft tall, 8 ft deep 7,500 gallons of waterTank weighs 8,000 lbs Water in the tank weighs 60,000 lbs

Graphics & SignsGraphics & SignsMust balance aestheticaesthetic, functionalityfunctionality and accessibilityaccessibility

Aesthetics - enhances and reinforce the brand image or promotional message Functionality – how well they perform every time and over timeAccessibility – must be “user-friendly”

Are used to communicate Brand environmentsSeasonalityLifestyle statementsProduct focus, information – silent Salespeople

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Graphics & Signs (contGraphics & Signs (cont’’d)d)

Sell Benefits not featuresNOT Handwritten!!!NOT Handwritten!!!Simple, easy to understandUniform Size (4)In Sturdy HoldersNobody Reads Them!People Believe Them!

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Graphics & SignsGraphics & Signs

Lifestyle statementsLifestyle statements

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Inform & EducateInform & Educate

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Lighting Lighting

Sets the moodSets the moodAffects colorAffects colorTube fluorescent is cheapFloodlights = AmbianceSpotlights = DramaDecorative lightingDisplays and WindowsTimers for Windows

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Emphasizing the comforts of home with decorative lightings. Pairs perfectly with plush furnishings, giving casual corners a

warm, residential style (seating areas)

Emphasizing the comforts of home with decorative lightings. Pairs perfectly with plush furnishings, giving casual corners a

warm, residential style (seating areas)

LightingLighting

Translucent Plexiglas walls backlit with color-changing LEDs deliver a multimedia lightshow synchronized with music

Translucent Plexiglas walls backlit with color-changing LEDs deliver a multimedia lightshow synchronized with music

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Accessories behind the cash wrap get the spotlight treatment with illuminated

backlit shelving

Accessories behind the cash wrap get the spotlight treatment with illuminated

backlit shelving

Museum-quality lighting designMuseum-quality lighting design

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FixturesFixturesThe only purpose of a fixture is The only purpose of a fixture is to sell merchandise!to sell merchandise!

TablesCubesShelving / TandemCounter TopSlat WallFloor!!!! Show Floor!!!! Show roomsrooms not not showrooms!!showrooms!!WaterfallsTell a merchandise story

Store Design, LayoutStore Design, Layout

Goal: Goal: ““To encourage profitable To encourage profitable sales from satisfied customers by sales from satisfied customers by

motivated selling staffmotivated selling staff””

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Layout Criteria Layout Criteria Decompression zonePrime real estatePrime real estateEntrancesWalls = PowerWalls = PowerFixturesLightingDepth to wallAisle Widths – “Butt Brush” = 36”min / 48”+ ideal Power Line of Site – “Focal Points”

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Prime Real EstatePrime Real Estate

First 18’Most trafficBest chance to sellMaximize your impulsePut your best sellers front and forward

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Feature Area

Cash Wrap

Feature Wall

Feature Wall

Feature Wall

Feature AreaFeature Area

Feature Wall

Feature Wall

Feature Wall

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Layout Criteria (cont.)Layout Criteria (cont.)Store front Store front – entrance: Does your storefront make a simple yet powerful statement?

A quick glance should tell what you are aboutInviting entrance to make customers feel welcome and to encourage casual passers-by to enterNot too cluttered so customers are able to enter easily with strollers, coats, and packages

Formal / informal windowsMust be creative enough to attract shoppers’ attention

Wall flexibilityFloor treatmentCeiling heightHVACEase of movementEase of movement

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Store FrontStore Front

Tells the customer what the store is about. Encourages the customer to

come in

Tells the customer what the store is about. Encourages the customer to

come in

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Creative Windows Creative Windows

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Lifestyle statement - Color statement -Less is more

Lifestyle statement - Color statement -Less is more

© Dionco Inc. 2008

ColorColor

Can immediately create a moodWarmWarm Colors

Red, yellow, orangeAggressive, spirited, advancing

Cool Cool Colors Blues, greens, purplesReceding colors

NeutralsNeutralsWhite, black, brownCan be warm or cool

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Some Observations About In Some Observations About In Store BehaviorStore Behavior

People walk toward the rightPeople walk toward the rightPeople slow down when they see reflective surfacesPeople face and walk forwardMen move down the aisles faster than womenSource: Why We Buy. The Science of Shopping, by Paco Underhill

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Some Some ““RulesRules””Change your store frequentlyCustomers habituate to your storesChange breaks throughChange breaks throughMove things as often as possible – change ‘front and forward “(weekly and sometimes daily) Customers see you/know you, but not really

HABITUATIONHABITUATION

Some Some ““RulesRules””Keep high margin product at eye levelLow margin at waist to knee levelOne merchandise statement in a focal pointMultiple items look best in odd numbersThe more merchandise in a window the less value and impact The more merchandise in a window the less value and impact it hasit hasDisplay is meant to sell product, make it easy and keep related products close (adjacencies)

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© Dionco Inc. 2008

More More ““RulesRules””Avoid fixtures over 60” in height (except on walls!)Color blockColor block

Use product to make a color statement - pull together a display with a single, dominant color

Keep it simplePeople read from left to right, plan your shelves and racks accordinglyMarkdowns at back of store except in January and AugustMake sure your staff moves around the store, mingling with customers and not standing at the cash counterStore packaging must lead to a customer’s repeat visit

All bags and boxes with the storeAll bags and boxes with the store’’s logo on thems logo on themBusiness card Business card

One word One word –– Temptation!Temptation!

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Total SolutionsTotal Solutions

DisplayDisplay--sell related products/services (Total sell related products/services (Total Solution)Solution)Put it together so the customer can see itPrice it in “packages”Think like a customer, what would you shop for that relates to each item – it is like “suggestion selling for dummies!”

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Neat And Clean Neat And Clean -- Always Always Rule # 1Keep it neat and cleanDust every dayClean shelves, floor, doors, mirrors, glass tops, tiles, props etc. constantlyRestrooms must be clean Keep product in perfect order and organizedYou only have one chance to make a first impressionCustomers judge you in the first 20 Customers judge you in the first 20 secondssecondsWhat is your point of contact and how does it look?

How Does Your Store Look?How Does Your Store Look?

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Then CritiqueThen Critique

Your exterior, entrance, interiorIdentify the good, the bad and the uglyImprove the goodFix the badEliminate the uglyDo it every 6 monthsDo it every 6 months

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Upgrade Your Service Upgrade Your Service ––The Sales Road MapThe Sales Road Map

The GreetingDetermining NeedsProduct KnowledgeSuggestion SellingTrading UpAnswering ObjectionsThe CloseMaximizing the Last MomentProviding After Sales Service

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Why Customers QuitWhy Customers Quit

14% PRODUCT DISSATISFACTION

68%

1%DIE

3% MOVE AWAY

5% FRIENDS CONVINCE THEM

9% COMPETITIVE REASONS

ATTITUDE OR INDIFFERENCEOF AN EMPLOYEE

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What Is A Customer Worth?What Is A Customer Worth?

Lifetime Worth:

Avg. $ x Visit yr x 30 yrs + 2 friends = Worth

$400 x 12 = $4,800 x 30 yrs = $144,000

+ 2 friends = $432,000!$432,000!

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What Is A Customer What Is A Customer Worth To Your Store?Worth To Your Store?

Average transaction value _____x Number of visits per year _____x Number of years _____x “Apostle” Factor _____= Lifetime value _____

Thank You & Stay In Touch!Download this presentation at www.dionco.com. Go to the Downloads page and enter the Password CTDA2008 in the

Client Area on the right end side of the page.

300 west grand avenue - suite 408 - chicago, illinois 60654 | phone: 312.673.0187 | fax: 312.670.2250 | email: jimdion@dionco.com