BrandWatch by Michel Gutsatz

Store windows tell stories

For a long time, store windows were the only 'public' point of contact between brands and their customers - and too often neglected. Hundreds of square meters of showcases that just displayed products without creating a presentation, blindly following merchandising guidelines of the period. Only a few brands had understood that store windows were a unique space for telling a story: Paul Smith (by installing objects unrelated to the brand such as Dyson vacuum cleaners, old Vespas or by making them really amusing), and Hermès, belonged to this category.
Today, when the Internet is, without doubt, the preferred point of contact between customers and brands, they are rediscovering and reinventing the store window. They are becoming a place that narrates real stories, particularly where the encounters between art and luxury are the most visible.  Brands use them as a means of instant communication - attracting the attention of the passers-by and making them pause to admire it.
Here are some recent examples that are superb:
The Louis Vuitton store windows for the launch of the Kusama collection:

The Hermès store windows with their interplay of sand and pigments (and the works of Manuel Merida)

Bally rediscovers its history and its roots in the shoe business

Starbucks sponsors the Edward Hopper exhibition... and makes it known

Hong Kong: what brands are they queuing up for?

I was in Hong Kong three weeks ago. Canton Road in Kowloon is the main artery where you find all the luxury brands, and to where "mainland" Chinese rush on weekends to take advantage of the price differences between boutiques in Hong Kong and the mainland (30% to 50% depending on products and categories).  I was able to take some photographs that make it clear that all brands do not sail in the same boat. Three brands stand out:
Pay honour to whom honour is due: Chanel. With just 7 boutiques (end of 2011) in China, Chanel’s presence on the continent is the most discreet, but among the Chinese it tops the wish-list in terms of intention to purchase in fashion and beauty (according to Bain, 2011). The boutique was full – with a long waiting line outside.

Hermès - which has 19 stores in China since the end of 2011 - enjoys the same affluence:

And lastly, Louis Vuitton (38 boutiques at the end of 2011) has fewer people queuing up at its door - but the shop is full ... of Chinese who seem less sophisticated than those standing in line at Chanel or Hermès...

On the other side of the street my eye is attracted by the Cartier boutique (37 shops in China) where a security officer supervises a line of ... 4 people, although the store is almost empty!

There are no waiting lines at any of the other boutiques:  Those of Italian brands are empty. Armani has 107 boutiques in China, Ferragamo has 57, Zegna 56. Dunhill (104 boutiques) and Boss (114 boutiques) are not worth citing – they are all equally empty.

What can we deduce from this quick survey? Simply that luxury brands are now clearly divided into two groups: those that - according to the tenets of luxury – know how to manage their rarity (and believe they should not have more than 40 boutiques in China) and the others... that have become merely masstige brands.

China: headed towards organic and natural

On my recent trip to Shanghai, a visit to a new shopping mall, Joy City, convinced me that natural and organic products were set to grow rapidly in the Chinese market. Two new sales outlets have come up:

• An Organic+ boutique offering European organic beauty brands (Weleda, SoBio, Patyka, Planet Kid, and others). There are currently about ten Organic+ boutiques in China. The creator of the chain, Edward Lu, explained that the increase in health hazards for the Chinese (air pollution, food adulteration, etc.) is fast turning them towards natural and certified products.  In fact, during the month of January, the press was filled with alerts concerning the quality of air in Beijing and also Shanghai, presented the target of 10% in green buses in Shanghai by 2015, and denounced food scandals.
  
  
  
  
• The COFCO (food and housing) conglomerate has set up an outlet selling natural products – offering assurances in terms of origin (production area), and quality certification (ISO 9001 / HAACP) ("Good Pomegranate / Good Region / Good Techniques / Standardized management). All products are sold under its own brand name (which did not exist as such until now).  As Patrick Yu, its CEO, says: "The core objective of COFCO's industry-chain development roadmap is to solve the problem of food safety, a problem which is the biggest headache for customers now".

These two initiatives clearly illustrate that the Chinese market is maturing very quickly and has some surprises in store for us – both in beauty and food distribution.

 

 

Retail / Internet integration - the new challenge

The players in mass-market retail are now conducting exciting experiments with a view to integrating sales through their stores and on-line.  Retailers have to cope with two factors they had not anticipated:

1. The strong growth of e-commerce - and its relative tardiness:  for instance, e-commerce represents less than 2% of Walmart sales in the U. S.
2. Direct competition from "pure players" such as Amazon and eBay
   • Amazon, now the largest on-line store (with an annual growth rate of about 30%!), is a direct competitor, with an offer that extends even to fresh products.
   • eBay has just launched a unique m-commerce initiative: showcases displaying products flanked by QR-codes have just been inaugurated in New York. The CEO of eBay says: "Retail and e-commerce are becoming one. Consumers don't make a distinction between the two".
     

It is worth keeping track of the initiatives taken by Walmart and Tesco:

• Walmart has just opened two pop-up stores in Californian shopping malls (100m2 and 300m2). These temporary boutiques have been opened under the walmart.com banner:  here consumers may either collect the orders they placed on the Internet, or discover a range of products with high added-value (toys, communication devices, computers, video games ..) and order them on the spot.
  
  
  
• Tesco is experimenting with a virtual store in the Korean metro: entire walls are covered with images of products with their prices and QR-codes, allowing consumers to shop virtually and be delivered the same day (for orders reaching before 7:00 p.m.). The results of this initiative far exceeded Tesco's expectations as shown in the following video:
  
  

Two lessons can be learnt from these various examples:

• A distributor can thus grow without creating new traditional bricks-and-mortar outlets: not hypermarkets but virtual walls or pop-up stores.
• What drives these initiatives is not e-commerce but m-commerce: the ubiquity of mobile phones and the extensive use that consumers make of these tools is a real point of contact between brands and their clients.

The Body Shop at Sephora U.S.

In February, Sephora U.S. and The Body Shop announced an unprecedented alliance: according to WWD (February 18, 2011) Sephora was to stock exclusive The Body Shop products in 170 of its 230 sales points in the U.S. This partnership deserves a second look - especially since the beauty brand had so far relied on total control of its distribution - selling only through its own stores (300 of which are in the U.S.).

• The offer: The sephora.com site offers 44 The Body Shop products, including 11 listed as "exclusive".  These consist mainly of different packs and formats:  the Olive Body Butter on the site comes in a 10.1 oz package at $ 20, as against 6.9 oz (for $ 18).
• Prices: a study of the prices shows that the "exclusive" products are about 20 to 25% lower at Sephora. The others are identical.
• Merchandising: a The Body Shop  "branded" area is reserved in the Sephora stores - "merchandised as a brand in a full bay presentation dedicated to The Body Shop".

This initiative should be viewed from the perspective of a news report that went unnoticed: The Body Shop U.S. (following a move initiated by ... Sephora - see my post of December 13, 2009) has started setting up its vending machines. While Sephora was satisfied with setting them up only in airports, The Body Shop has chosen to install them in shopping malls and supermarkets: Kroger Marketplace, Stop & Shop, H-E-B and Jewel Osco.
We are obviously witnessing here the implementation of a strategy of banalizing The Body Shop in the U.S.: the strategy of exclusivity is being greatly "watered down" by the multiplication of outlets operated in this manner.  The big question is, what consequences could this have for the brand: can it defend its status considering the proliferation of distribution channels ... and the non-negligible differences in prices?
Some Internet surfers seem to doubt it:
lara / the glossarie.: i am definitely with you, muse. this is a weird one for me? i associate them as two totally different types of companies and i love visiting the body shop because it’s different from sephora. kudos to them for wanting to get their products out to more people, it just compromises their boutique-iness for me, i guess.
Kel: I prefer to buy the products in The Body Shop store. It’s such a cute little store and I feel like it’s not crowded the way that Sephora is. Shopping in Sephora makes me feel like a squirrel in a field full of hawks. They don’t keep their eyes off you
the Muse: lol kel! I agree about Sephora but I also feel TBS employees are annoying and keep asking can I help you, have you tried this, have you tried that, etc…so I’m actually more comfortable in Sephora as they do watch you like a hawk but at least they are jumping on you about this product and that one and proceeding to mist you and slather it on, etc.


However, the question raised (pressure from the sales staff) begs another question: the commission-based salaries, specific to the USA - which concerns not only The Body Shop.
I find this initiative interesting, on one condition: that the consumer-experience lived in The Body Shop becomes truly a reflection of the strong values of the brand - an experience that Sephora can never offer. Yet, one can ask oneself if this experience really exists...

 

Luxury: the new "Retail" formats are found in Asia

Two new boutique concepts perfectly illustrate the research luxury brands have been devoting to their "retail" formats. These two initiatives have seen the day in Asia - showing not only that these are the most important markets for luxury brands, but also that a brand is capable of being innovative.
Dior has just reopened its flagship store in Hong Kong (One Peking Road, Kowloon), where it offers, on three floors of more than 1000 m2, its entire collection for women (clothing, leather goods, footwear), babies and men - and its range of watches and jewellery.  The only thing missing is its beauty products. Designed like a modern apartment (evoking its flagship store on Avenue Montaigne to a certain extent) it features all the codes of the mark, in grey with the same caning used for the floor in the "bags" section. Blending fashion and art, Dior projects itself as a lifestyle brand.

 
Hermes has done the opposite.  Having noticed that its watches were too often sold in a multi-brand universe that did not correspond to the status of the brand (like here at the airport in Shanghai!)


the brand decided to test the shop-in-shops concept in department stores and boutiques, then created the La Montre Hermès boutiques: this enables it to valorise its history (its first watch dates back to 1928) and its watch-making expertise. The first store was opened in Singapore, facing the Hermès boutique. The result was amazing: not only did the sales of the new boutique exceed the objectives that were initially projected, but sales of watches in the Hermès shop opposite increased by 25%!  Several other shops followed: Taipei, and now Shanghai.



Both Dior and Hermès seek to enhance their history: the former, by regrouping most of its products in a unique location, a modernized mirror image of its original boutique; the latter, by exiting the multi-brand universe so as to be able to exploit its own brand story.
One question remains: when will their spectacles and beauty products (traditionally confined to their respective circuits) be included in the flagship lifestyle stores of these brands?

Customer Experience Design: A White Paper from The Scriptorium Company

In 2010, the Scriptorium Company conducted a mission for a luxury beauty brand. The brand in question wished to develop "customer journeys" that straddled multiple distribution channels, enabling it:

• To connect directly with its client(s) and win their loyalty;
• To offer them "contact points" that were consistent with the values of the brand.

We invite you to download the "White Paper" that describes this mission.

"Case Study: Customer Experience Design for Luxury Brands
Re-engaging with consumers to design integrated customer journeys in the luxury industry".

 

 

P&G innovates with its business models

Procter & Gamble does not stop at just developing its brands.  Over the last four years, the company has launched into a reflection on its future poles of development which show three main characteristics:

1. Building upon key consumer trends;
2. Implementing an innovative business model;
3. Reinforcing the value of its brands.

P&G has thus set up a division - P&G FutureWorks - which is driven by two work ideals:

• Working in partnership – with "business contributors";
• Developing business models focused on service.

By connecting with external partners, our scope has expanded beyond P&G's strategic core businesses into new channels and domains. P&G FutureWorks seeks to create adjacencies and new business models for P&G brands in high-growth categories that are on-equity, strategic and service-based.

As a result, three initiatives have emerged over the past two years:

• Mr Clean Car Wash: 16 car-wash centres (including 13 in Atlanta) that capitalize on the Mr. Clean detergent brand - and strengthens it by adding a "service" aspect as well. Developed by franchisees, this brand places the accent on cleanliness, comfort, recycling of wastewater, price ... and sells Mr. Clean products.
• Tide Dry Cleaners: 4 franchised laundries (Kansas and Ohio) offer a unique range of services (drive-in / 24-24 secure deposit / same-day service / alterations...) in clean and odour-free spaces…
• The acquisition of MDVIP: a network of several hundred doctors who have established a one-to-one relationship with their patients. For an annual fee of $ 1,800, each person is entitled to health monitoring, 24/24 - 7/7 availability, a personal website and immediate access to a doctor. Each of the doctors handles 600 patients (as against an average of 2,000 in the U.S.).

Three elements seem essential here – those that The Scriptorium Company also systematically encourages with its clients:

1. The partnership aspect: 50% of P&G's innovations originate from outside the company - including its consumers;
2. The quest for new business models - an approach to innovation that is too often overlooked but which truly creates value;
3. The creation of new services in areas in which the group's brands excel – corresponding to a mega-trend that we now see among consumers.

Customer Experience: after-sales service at A. G. Spalding

Less than two years ago I bought a bag from A. G. Spalding & Bros.  Recently, its two zippers came off, so this week I went to their shop located in the Marais in Paris.
Sales assistant: "To benefit from the 2-year guarantee, I would need a proof of purchase"

Me: "I do not have it.  But I purchased it recently - you will be able to find the collection in which this model is shown..."

Sales assistant: "I do not know this model. But then, I have been here only for a very short time...."
Me: "How long will it take to repair?"

Sales assistant: "From 3 to 4 months ... We will send it to our workshops in Italy. There is a despatch every month ... it's too bad that the one for December has already been despatched.  So we will send it in January..."

Me: "How much will it cost me?"

Sales assistant: "Around 30 Euros per zipper..."
While I was leaving, to reassure me he added, "You know we have pleasant surprises sometimes... It may take less than 3 months..."
This was my encounter with the zero degree customer experience - with a salesman who was really very courteous:

• An after-sales service deadline that is stupefying;
• An organization (monthly shipments to Italy) that deters rather than encourages the client from having recourse to it;
• The impression that even if I had obtained service under the guarantee - the time taken would have been exactly the same...

One could dream of a situation where the salesman was able to determine that my bag was part of the 2009 collection and it was therefore certainly still under warranty ... but that would be expecting too much. The only thing I wanted was to retrieve my working tool – the manufacturing quality of which really proved to be very mediocre.  Alas!  Sergiolin, the Italian leather goods manufacturer (they recently bought Lamarthe) which owns the American brand, A.G. Spalding, probably never considered the question of customer service, content to be just a seller of products...

L'Oreal's Hairdressing Salon Concepts

In early November, at the Mondial Coiffure Beauté 2010 event, L'Oréal Professionnel introduced – together with its product lines (including the breakaway Inoa - Innovation No Ammonia) - a series of ... concept hairdressing salons!

This is the first time the brand dares to create salons, and at the same time, take advantage of the work the group has been doing over the years in the domain of consumer expectations. The result is surprising - and presented some very interesting trends. L'Oreal thus created:

• 3 "Green" salons
  • Eco Recycling – equipped with recycled products;
  • Eco Zen - where water is recycled and air purified;
  • Eco Nomic - produced from recycled packaging, allowing it to dispose of a low-priced "green" salon. 

         

• A "Men Only" salon – the Sports Grooming Bar, with LCD screens to watch sports programmes, video games, touch screens.
  
• An "Express" Salon - the Style Minute Lab - for women on the go, no haircuts, just styling and blow-drying. A single price policy: 10 minutes, 10 €, 20 minutes, 20 €.  This salon is in the form of a carousel, and can be installed in a train station, an airport, a shopping mall or a business district.
  

This did not happen by chance: it demonstrates how L'Oreal (which has already created a L'Oreal Stores concept in the USA) reflects on the evolution of retail. Faced with a very conservative profession - where innovations regarding service are very rare - the brand is positioned as innovative and as a determining force. I cannot help but draw a parallel between this case and the efforts made by millers in France about 20 years ago wishing to restore the good taste of bread – and proposed special baker shops, new baking methods, special flours, to bakers. "Paul" was conceived in this way.