Browsing Tag

kohl’s

Retail’s Mysteries Revealed: Can You Tell Today What Your Customers Will Want Tomorrow?

The brand-breaking challenges JC Penney has had are in no way inevitable, Forbes magazine says, in this discussion of predictive analytics. By harnessing the power of mathematics, we’re told, retailers can significantly reduce the risk of going catastrophically off-brand, alienating your best customers, and losing market share. Does Forbes have it right?

Yes and no.

Yes, because statistical analysis of previous customer behavior provides retailers with tremendously valuable information. Objectively examining what has happened in your stores over the course of time can be a very revealing exercise. Retailers who engage in this type of analysis often discover things about their operations that they never otherwise suspected.

In the Forbes article, for example, we see how retailer Perry Ellis discovered that when their associates actively engaged with customers, such as assisting them in the fitting room, those customers would spend 50% more on Perry Ellis merchandise than customers who were left alone to shop.

This type of insight is valuable. But it is not sufficient.

Going Deeper: The Secret to Retail Growth

It’s really good to know what your customers have done. It’s even better to know why they’ve done it. Understanding the mathematics of customer behavior is a great first step, but to achieve sustainable, meaningful growth, retailers need to understand their customers’ motivations.

This is where things get complicated. 90% of customer behavior is unconscious. This means that customers don’t fully know — and they certainly can’t articulate — what leads them to embrace one retailer and eschew another. All of the stuff that determines these decisions takes place ‘off radar’, in the customer’s unconscious mind.

The unconscious mind is a complex and nuanced territory. We all have an unconscious mind. It’s where we store the millions upon millions of messages we’re given by our culture, education, and environment about the type of person we’re ‘supposed’ to be. Every image we see, every story we hear, every experience we go through leaves its mark on our unconscious mind. Together, these forces combine to form our self image.

Customers make purchasing decisions that reinforce their self image. Have you ever had a customer walk into the store and say “This place just feels right?” When they’re expressing that sentiment, it’s because the experience you’re providing is in alignment with their self image.

Now, obviously, every customer has their own unique self-image. No two people on this planet view themselves the same way. However, it’s possible to discover what traits and characteristics are integral parts of the majority of your best customers’ self image. This is done through the process of Brand Modeling, a proprietary process we’ve developed to help retailers attract and build strong relationships with highly profitable customers.

Identifying the primary unconscious drivers of customer behavior makes it infinitely easier for a retailer to stay on brand, better please their customers, and build market share. In other words, there’s a reason Kohl’s is successful, and JCPenney isn’t.

The ability to predict, with a high degree of certainty, what your customers are going to want tomorrow, begins with statistical analysis of previous purchasing behaviors. But it doesn’t stop there. When you’re willing to go further, and delve a little deeper into what makes your customers tick, that’s when true sustainable retail growth happens.

May 6, 2013 by

Retail’s Biggest Mysteries: Why is JCPenney Only Now Figuring Out What Kohl’s Clearly Knows?

We spend a lot of time considering the mysteries of retail here, but this one’s got us stumped:

Why did it take JCPenney so long to figure out that they should listen to their customers? Sixteen months after rolling out the new “Fair and Square” pricing strategy, the beleagured retailer is now returning to its old pricing strategy. The disappointed masses haven’t exactly been closed-lipped about what the brand was doing wrong. A commenter on the Forbes article, Who Can Save J.C. Penney? spelled things out pretty well:

A big mistake was made when Penney’s eliminated all of the coupons for the allegedly affordable everyday pricing. The merchandise that is now being sold is inferior garbage. Uglier, cheaper made clothes that looks like its for middle aged women. I’m middle aged and I wouldn’t even wear it because the stuf looks like Blue Light Polyester Specials. Even the sales aren’t true sales because that merchandise should be much cheaper on clearance. I know, I was just there last Thursday.

Unless you are trying to kill the brand, please bring back the merchandise of yesteryear. Yes, some of it was pricey but when it went on sale and you used the coupons and the 15% off Internet coupon, oh my goodness, you really felt like you had stolen a bargain. And JCPenney profited, too. Do not underestimate the significance of coupons. Do not underestimate quality. We appreciated the old Penneys. Bring it back or should I sing Auld Lang Syne now?

Cult Branding: Are You Smart Enough To Listen To Your Customers?

The information that JCPenney’s leadership needed to change direction was clearly always there. By every meaningful metric — sell-through percentage, same-store sales, sales per square foot — the brand was floundering. Interestingly, during a recent industry conference, a speaker highlighted how innovative platforms like a new instant withdrawal casino have quickly adapted to consumer demands for faster payouts and more streamlined services, offering valuable insights for the retail industry. Consumers and retail analysts alike were telling JCPenney why things weren’t working. Yet it is only now that we see the JCPenney leadership acknowledging, “We now understand that customers are motivated by promotions and prefer to receive discounts through sales and coupons applied at the register.”

JCPenny’s commitment to an untenable strategy demonstrates that the brand lacks the commitment to understand who their customers actually are and what matters to them that is a central aspect of operations at dominant retail brands like Kohl’s Department Stores. One of the primary advantages of this humanistic approach is that retailers are then prepared to determine in advance how effective any marketing or operational changes are likely to be. Given advance information that Fair and Square pricing was going to alienate far more customers than it attracted, would JCPenney’s have gone forward with the plan?

It’s important to understand the essential role played by Kohl’s discounting program. Retailers who are striving for growth in this crowded marketplace need to understand the complete suite of unconscious, psychological motivations that drive their best customer’s purchasing decisions. For whatever reason, JCPenneys decided to discard the powerfully complex appeal of discounting, while Kohl’s made it a central part of their messaging.

The result? Here’s what Kohl’s numbers look like. Here are JCPenney’s.

Retailers that are successful are retailers that are willing to listen to their customers. A comprehensive approach that takes into account both explicit consumer commentary and the historical behavioral patterns driven by unconscious, psychological motivators delivers actionable insights essential for brand growth. Frankly, the JCPenney’s leadership team may have waited too long to get with the program. But that’s not the case for every retailer. Here’s what the alternative looks like.

April 25, 2013 by