Theories on the next retail revolution
Boston — Brian Kilcourse, managing partner for Retail Systems Research, took some time out at the Orgill Fall Market Friday to deliver a primer on mobile technology as a driving force in the contemporary retail environment.
The seminar, titled "The New Rules of Retail: How Today’s Consumer is Changing the Game," positioned mobile technology as a harbinger of a giant "reset" in retail comparable to the Industrial Revolution and onset of the Information Age.
Perhaps counter-intuitively, Kilcourse identified the invention of the barcode as the onset of the Information Age, as well as the launch of the iPhone (versus the smartphone in general) as the dawn of what he calls the Participation Age.
"I didn’t think we’d have another tech-driven reset moment in my career – but it happened," said Kilcourse. "We’re being challenged by web and mobile, which caused a dramatic power shift away from the retailer and to the consumer. You can think of them as very demanding customers. They have the power of information at their fingertips."
Aside from the transparency and visibility brought about by mobile devices, Kilcourse cited the unprecedented amount of people now participating in the global economy via the various "digital tidbits" they leave behind that educate retailers on consumer motivations.
Another key theme was the importance of creating an environment that will allow consumers to make favorable decisions before they enter a brick-and-mortar store.
"We build our stores with the assumption that the consumer is an empty vessel when they enter it," he said. "All the value that is retail is put into those four walls, but decisions are being made outside your store. You can’t have a salesperson approach them to help them make their decisions in a way that works in your favor. And that is why the power has shifted."
Kilcourse pointed out that despite the variety of channels used by consumers in their decision-making processes, only 5.6% of sales are actually made online.
One substantial takeaway was the imperative to thus create a dialogue outside the four walls of one’s store with the intention to bring the consumer inside. Additionally, employees equipped with mobile technology can help consumers make choices while accessing the same information online.
Research collected by RSR consistently positions the successful stores as the ones that believe more strongly in the power of mobile technology. Additionally, more retailers are collectively recognizing the importance of mobile, with 47% citing multichannel customers as being "significantly more profitable" in 2013, compared to 38% in 2012.
The philosophy of house brands on display in Boston
Boston — Orgill’s Jim Wilson, VP of Worldwide Sourcing for the Memphis-based distributor, is philosophical about the role of house brands like MintCraft, Tool Basix and Vulcan.
"We’re doing this because it adds value and our customers tell us it’s a good thing to do," he told HCN during on the market floor of Orgill’s Boston Dealer Market here. "If this was no longer a value, we would exit these categories and lines, but I don’t see that happening here or anywhere else in the retail environment."
In fact, Wilson said sales of the distributor’s private brands — including all-purpose MintCraft for items from sledgehammers to bicycles, and Boston Harbor for decorative lighting — are growing at a faster pace than Orgill’s overall sales.
Part of that has been the increase in the breadth of the Worldwide sourcing offering, but also market pressures. More credit goes to the program value than the individual brand names, he said. "The growth that we’ve seen is really from the value that we’ve shown in the process that we source products," Wilson said.
The value is on full display here at the Boston Orgill Dealer Market show floor, where "Dare to Compare" signs show the price advantage of various Orgill-brand products in head-to-head competition with those of national retailers — with actual receipts from Lowe’s and Home Depot
The growth of Orgill’s worldwide sourcing division comes purely on the merits of the products, Wilson said.
"We don’t force any of our customers to buy any of our sourcing products," Wilson said. "And there’s no additional incentive for our salesmen to sell any of our sourced products."
Along with MintCraft and Boston Harbor, Orgill’s brands include HomeBasix, ToolBasix, Diamondback workwear, Power Zone commodity electrical products and Vulcan tools.
Wilson added that national brands are and will remain crucial to the success of Orgill and its customers. "We could not exist without our manufacturer partners who provide the products and our brands to our dealers," he said.
Still, private label is evolving and will most likely continue to shape the retail environment.
The balance of private label at retail is a deep and important question. "As to where this all going, it’s kind of like Philosophy 101," Wilson said. "It’s changing the complexion of the retail environment and it’s exciting to watch it happening."
Market delivers tips to improve price image
Boston — The phrase “price image” plays a key role in merchandising best practices, according to a seminar presented by Paul Ohrberg, Orgill’s Director of Retail Concepts.
The presentation, titled "Merchandising Techniques: Increasing Your Add On & Impulse Sales," covered merchandising techniques for dump bins, rolling racks, stackouts, counter displays, check out areas, queing fixtures, endcaps, clip strings, wing panels and specialty fixtures.
Among the more prescient takeways was the golden rule of minding price image – that is, promoting aggressive pricing in highly visible locations as well as rotating promotional items frequently.
Ohrberg delivered the seminar Friday at the Orgill Fall Market, held at the Boston Convention and Exhibition Center.
"You want to have a great price on an endcap or a power buy to promote the perception that you’re a low-priced store," said Ohrberg. "Some of you might have a lot of loyalty; customers who are there every day or week. People like to see change. Keep the store looking alive."
Ohrberg, who has years of retail experience under his belt working at Home Depot, lumberyards and various hardware stores, was partially responsible for the Cobblestone Hardware and Windsor Market concept stores, as well as the various product showcases on the Orgill floor.
Ohrberg highlighted the importance of using temporary dump bins, rolling racks, stack displays, main entrances, endcaps and checkout counters to promote a sense of urgency and stimulate impulse buys.
The presentation included some specific tips, including:
• limiting product selection for temporary dump bins,
• choosing items that can be stacked safely,
• displaying larger items at the main entrance to encourage the use of a shopping cart,
• using service counter displays to remind customers of something they may have forgotten,
• keeping checkout display items generally under five dollars; and
• using endcaps to promote new items with good price value.
"If you scare them away on price with the first thing they see, they’re going to think you’re an expensive store," he said. "Price image is key."