Category — Retail

Macy’s is turning some of its backrooms into warehouses to compete more effectively against Amazon and other online retailers, reports Dana Mattioli in the Wall Street Journal (5/15/12). “We’ve spent the last 153 years building warehouses,” says Peter Sachse, Macy’s chief stores officer. “We just called them stores.” Macy’s plan is to “convert 292 of its 800-plus stores for the task, with expanded storerooms and new technology that dynamically updates the status of every item in every store.” The idea is that excess inventory in stores can readily be sold online, and vice versa. It will also save “time and money on shipping” because items ordered online can be shipped from the store closest to the shopper.

The challenge is that, unlike Amazon, which uses barcode-reading robots to pick and pack orders, Macy’s is relying on human beings foraging through stores to find items and then packing and shipping them to online customers. Finding an item can be especially difficult when its color has a trendy but vague name like “magical” or “journey.” Macy’s actually is far from the first retailer to integrate its online and instore distribution and fulfillment operations. Retailers have been working at this “since the late 1990s,” although the technology required for success is now “finally in place.”

Nordstrom has been filling “online orders with goods shipped from its stores” since 2009 “and now ships from all 117 of its full-line stores.” But “omnichannel” distribution, as it is known, can be complicated and expensive, in that it can require shipping “from, say, seven separate stores” versus “one online warehouse.” Whether the store or the website gets credit for the sale is another tricky issue. However, Jamie Nordstrom, who heads up Nordstrom’s online operations, says the approach “has cut the level of markdowns and improved margins.” Macy’s profits, meanwhile, have “jumped 38 percent,” and its online sales 34 percent, in its most recent quarter.

Six years ago, a printmaker and a web developer teamed up to enable anyone with a story to capture it in a 32-page sketchbook, reports Liz Robbins in the New York Times (5/13/12). What Steven Peterman and Shane Zucker started then in Atlanta is today a collection of some “12,500 sketchbooks from more than 130 countries,” housed at the Brooklyn Art Library. An additional 7,502 sketchbooks “will join the permanent collection when they return from a 14-city tour, currently in Chicago and ending in Melbourne, Australia, in November.”

Anyone can participate: “For $25, any doodler, student, parent, graphic designer, architect … or would-be artist can fill a 32-page sketchbook and add it to the collection.” Located in a storefront, the Brooklyn Art Library “fits neatly on its block, an upscale artistic corridor with an architectural studio across the street from apartment lofts, an art gallery, a bar, a barbershop and a used-book store.” It’s also possible to sign up online — or simply peruse the many sketchbooks by applying for a library card, which entitles you to review two sketchbooks at a time.

“This is personal, this is someone, these are moments,” says Thanassis Petropoulos, a comic-book artist from Athens who recently checked out the collection. “It’s like you’re having coffee with your girlfriend and you’re going to do a sketch of her. When you’re done, this ends up here and someone from around the world can see moments from your life.” Thanassis hasn’t created a sketchbook himself yet, but is thinking about it. “We don’t have these kinds of things in Athens,” he says. “We don’t have a place to hang out with total strangers.” The library also sells “art supplies and vintage goods” as well as “dark chocolate bars, with custom wrappers that match the library cards, for $9.”

Maya Stein is bike riding and typewriting her way from Massachusetts to Milwaukee, reports Liz Leyden in the New York Times (5/12/12). Her inspiration is a typewriter her father kept “in the hallway between bedrooms for the family to use, an exercise in creativity that changed her life.” Her inclination is to ride her bicycle from her home in Amherst, Massachusetts to Milwaukee, Wisconsin, “where the design for the first mass-produced typewriter was developed in the 1860s. Along the way, she is delivering a manual typewriter to public spaces and inviting people to take a turn at the keys.”

As Maya explains: “I want to bring that communal hallway back … I want to make a space for collaboration and creativity, to invite people to contribute their voices to the larger story of the community we’re all in.” Her journey, which began on May 5th and coincides with her 40th birthday, is “to ride 40 miles a day, typewriter in tow, for 40 days until she reaches Milwaukee.” Her typewriter of choice is a turquoise Remington Ten Forty.

She funded her project with $16,000 raised on Kickstarter and it “is providing inspiration for her own writing, which she is doing daily at type-rider.com. “I saw a man mowing his lawn and I loved catching that moment,” says Maya. “All that I see in between my stops, that’s a treat. That’s my gift to myself.” Maya sets up in front of shops or cafes, her typewriter alongside a chalkboard that beckons, “Write Yourself Here.” She doesn’t try to sell anyone on taking a turn, but rather just waits to see what happens. Some folks prefer to talk to Maya instead, which is fine with her. “There are moments you cannot capture on paper,” she says.

How we feel about ourselves has a lot to do with the prices we are willing to pay, reports the Economist (5/5/12). Ayelet Gneezy and a team of researchers at the University of California conducted a series of studies suggesting that “a desire to think of yourself as a good person” can drive how much you’ll pay for something. Their research, published in the Proceedings of the National Academy of Sciences, also found “that allowing people to name their own price may result in fewer sales than the old-fashioned approach of simply setting a single price for everybody.” One experiment involved “53,000 customers of a theme park, who were photographed while riding a rollercoaster.” All customers were allowed to name their own price for the photo, but some were told that half of the price “would be donated to a children’s charity.”

Interestingly, the price offered by those giving half to charity was five times that of those who were simply asked to name their own price. However, “only half as many people” in the charity group chose to buy a photo at all. The researchers say that “the two results are linked: because the ‘right’ price for the charity-and-photo combination was felt to be much higher, a significant number of people preferred not to buy at all than to damage their self-image by offering a miserly price, and, by extension, a tight-fisted donation to a deserving cause.”

A second experiment involved buying photographs from a boat ride — with the price set at $15 for one group, $5 for another and “name your own price” for the third. All three groups were told that the normal price was $15. Demand rose at the $5 price point and fell among the “name your price” group. The researchers say this is because “an overly low price can feel unpleasantly parsimonious.” In a third experiment, restaurant patrons were allowed to pick the price, but some had to pay in public while others settled up in private. Those who paid in private “chose to pay more, on average, than those who paid in public.” Researchers conclude that this means “it is your conscience that prods you to be generous, as opposed to pressure from your peers.”

A roundtable discussion on consumer and shopper insights, with Stephanie Cota of Mattel Brands, Hermann Deininger of Adidas, Sally Grimes of Newell Rubbermaid, Alfredo Martel of Caribou Coffee and Kevin Lane Keller of Dartmouth College.

What is the hardest thing to get right with consumers today?