Position Yourself for Vending Machine Selling

RetailWire recently hosted an Internet discussion among retailing experts about the documented growth in popularity of the ultimate format for self-service brick-and-mortar retailing—vending machines. (Registration at RetailWire, which is free, is required for access to the posting.)
     Items named in a compilation by the NBC “Today” show as being sold from vending machines include products ranging from live bait worms to gold bullion bars. Most of the examples in the “Today” posting were from Japan. Among food items, the offerings included fresh eggs, ripe bananas, and live hairy crabs.
     Retail space, particularly in high-traffic areas, is very limited in Japan. A vending machine can keep the stock more compactly than on store shelving, and there’s no need to have a place for the salesperson or cashier to stand. Actually, those same arguments for vending machines apply—even if to a lesser extent—for retailing in most other developed countries. In the U.S., we’re renting DVDs from Redbox machines and buying airplane tickets from airport kiosks.
     Position yourself to take account of the increases in vending machine sales. The two primary models are:

• Have vending machines within your brick-and-mortar store to sell certain items. Hundreds of Macy’s stores have had vending machines to sell electronics products about which consumers are likely to possess high familiarity. From a shopper psychology perspective, it’s important that consumers be told by signage that they can seek advice from sales personnel about what to purchase from the machines. In addition, train your staff so that when a customer asks a salesperson for a product that is sold only from the machine, the salesperson walks the customer to the machine or hands off the customer to another salesperson who will do that.
• Extend your store name and your selling possibilities to locations outside your store by placing vending machines in locations likely to have large numbers of potential customers. Best Buy Express vending machines are located in airports, each machine selling electronics products with which, again, the customer has high familiarity. With machine placements outside your store, go beyond allowing customers to return unsatisfactory items to your store. Encourage them to do so. When customers come to a store and their problems are resolved smoothly, they become quite likely to make additional purchases. Chances are you’ll be able to offer them a larger selection of options than is available in the machine.

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Inform Customers, But Don’t Intrude
Simplify Item Returns for Customers
Keep E-Commerce Product Returns Pleasant

Branch Out Scripts to Allow for Rituals

I’m a fan of scripting what we say and do with shoppers. It’s not that I expect the retailer to recite the exact words I suggest or carry out the precise actions I propose. It’s that I find scripting a good way to explain what I mean. Then I recommend the retailer be flexible in adjusting the phrasing and behaviors to fit their style.
     There’s also a need for flexibility on-the-fly when using scripts because many shoppers follow rituals. For instance, have you noticed how some shoppers will complain and complain about a product or service that seems ideally suited to the shopper's needs and desires, and then after all the complaining and what seems to be arguing with the salesperson, the shopper will go right ahead and buy the offering?
     Other shoppers come into your store asking for a specific product and brand, but before buying it, as they'll end up doing, they want to hear about at least a few alternatives, as if to convince themselves they're making the right decision.
     And then there are those customers who refuse to buy a product until they can take it out of the packaging and run their hands over it. This last group, not surprisingly, resist making purchases over the Internet, although, according to researchers at University of Kentucky and University of Wisconsin, rituals of the grasp-and-caress crowd can be satisfied with written or spoken descriptions of all the different textures the product has.
     The complaining, arguing, searching, and caressing are shopping rituals. I'm sure there are many others you've seen as well, some even more bothersome than my three examples. As salespeople gain experience, they learn to respect the customer going through the ritual—or if not respecting the ritual, at least staying out of the way of the ritual as much as possible.
     Most shopping rituals are quite deep-seated in the personality because they were introduced early in life as the child watched others shop and was coached by parents. Some shopping rituals, such as a need to handle or smell products, often have their origins before birth, being hardwired in as the brain developed in the womb.
     Researchers at New York University have verified how uncomfortable certain consumers become when retailers’ service scripts don’t take account of the individual consumer’s shopping rituals. Develop scripts that prepare sales staff to flexibly branch out with different alternatives.

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Let Shoppers Go Through Their Rituals

Have Products & Services to Pamper Pets

People love their pets and have loved to spend money on them even through these tough economic times. According to a recent Marketing Daily article, U.S. pet food sales at retail in year 2010 were up almost 3% over the 2009 level. Yes, this was the lowest growth rate in years. But at the same time, the rate was notably higher than for most other retail product categories.
     Survey researchers at Eastern Washington University found that about 80% of dog owners said they were serious about selecting healthy food for their dogs, but only 65% of the same people said they were serious about their own food selection. Findings from an ethnographic study at University of Utah attributed trends like these to us considering our pets to be more defenseless than ourselves.
     The Humane Society of the United States says about 40% of U.S. households have at least one dog and about 35% own at least one cat. That’s a substantial market, even if you don’t add in the horses, birds, lizards, gerbils, and goldfish. Researchers at St. Joseph’s University report that about 90% of pet owners consider their pets to be members of the family and about 75% of household cats and dogs receive gifts on holidays and birthdays.
     Whatever your retailing line, it would benefit you to carry some products of special interest to pet owners. Almost any retailer can have at least a limited line for pets. Harley-Davidson, Ralph Lauren, IKEA, and Lands’ End have all done it. The emphasis should be on health benefits.
     Services retailers, too, would benefit by thinking about ways to serve the pet owner market, although this is more likely to require a business that’s completely gone to the dogs, not a limited-line add-on. From Wag Hotels, offering accommodations in two cities, to PetsHotels, with locations in most U.S. states and one Canadian province, the emphasis is on luxury.
     The Marketing Daily article predicts that if you carry products and provide services for pets, your suppliers will back you up with marketing support. In year 2009, the latest year for which figures are available, pet food and pet care advertising expenditures grew 22% over the prior year. There’s consolidation among the companies. Procter & Gamble/Iams snapped up Natura, Nestlé Purina digested Waggin’ Train, and Wind Point Partners acquired pet accessories company Petmate. This could mean greater marketing muscle from your suppliers.

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Go Upscale for the Pet Market
Honor Those Who Love Those Pets

Reenergize Gift Card Sales

This week, First Data—which establishes gift card programs for merchants—announced they’ve been granted a patent for technology that allows activation of multiple prepaid cards at point of sale. This could save time for your store staff who would otherwise need to activate each card individually if a customer wants to, for instance, buy a large number of gift cards as employee incentives.
     Such technologies might help you to reenergize gift card sales. Starting in year 2007, gift card sales dropped sharply. That was disappointing, since gift cards can be good moneymakers for retailers. The shopper with a gift card is more likely to browse your aisles than is the shopper without a gift card. At the least, they become better acquainted with the scope of your merchandise selection. At best, they’ll see a great many items they want, so they’ll spend some of their own money in addition to the gift card allotment. In addition, research indicates that when a customer purchases a product with a gift card rather than with other types of payment, the probability of them returning the item is lower.
     Gift cards are the single most requested item for the holidays. More than 55% of adults say that’s what they’d like. Because of the appeal of gift cards, the way to increase your sales is to find out what’s getting in the way. In a National Retail Federation survey, about 22% of respondents said their main reason for not buying gift cards is because the cards are too impersonal.
     So individualize your gift cards and holders, with a selection of themes—such as sports and travel, a range of colors, and enough space to write a message to the recipient. Current technologies even allow for the customer to add a photo of their choice to the card.
     Involve all sales staff, not just cashiers, in selling the cards. When a customer hesitates in selecting a gift, say, “We have gift cards available. As you look around our store, what do you think the recipient might like? You could make some suggestions in the message you write to them.”
     Are you surprised that I’m talking about gift cards when it’s not a holiday season? Well, the most common occasion for gift cards is not the holidays. That’s in second place. First place is birthdays, and birthdays come on every page of your retailing calendar.

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Help Customers Personalize Gift Cards

Embrace Shopper Expertise

An increasing percentage of shoppers have built expertise about product categories before entering your store, and they want you to acknowledge that expertise. When shopping for bed sheets, they consider themselves to be highly knowledgeable about bed sheets.
     Here are tips on staying in the good graces of these self-proclaimed experts:

• Respect them. Do your floor staff know where all the merchandise is located? Are they aware of the comparative features of brands in their department? Can they explain them to the customer if asked? Can they explain other things as well? Staff your store with experts who enjoy sharing their knowledge with customers in a team-oriented way. Customers want sales staff who know it all, but without acting like stuffy know-it-alls. Retired journeyman plumbers make terrible hardware store employees if they have trouble explaining the steps to replace a faucet. Teens with a wonderful sense of fashion style are bad clothing department advisors if they label some teen customers as beyond fashion rescue.
• Surprise them. Research at University of Pittsburgh and University of South Carolina finds that experts are attracted to categorization in ways that surprise them. Sporting equipment might be categorized by the sizes of the items. Power tools might be categorized by the type of job they could be used to complete. Clothing might be categorized by color. Foods might be categorized by country of origin. How could setting up such strange divisions increase retailer profitability from selling to product experts? The answer: By surprising the expert, we get them to pay attention, and a customer who pays attention is more open to seeing the value in a higher priced option.
• Impress them. Experts want to know technical specifications. At the same time, they often make product selections without prolonged thought. They don’t request features lists because the experts think they already know what the products can do for them. Experts are interested in technical specifications largely to justify to themselves and others that they’ve made the right choices. In fact, those University of Pittsburgh and University of South Carolina researchers say experts are notoriously complacent about using the technical information before choosing what they’ll purchase.

For your profitability: Sell Well: What Really Moves Your Shoppers

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Have Staff Who Show and Share Expertise
Give Experts Novel Product Categories

Feature Economical Justified Luxuries

Late last year, Estee Lauder reported a 14% jump in sales of organic beauty products quarter-to-quarter. By comparison, mass market beauty products from Procter & Gamble Co. and Unilever came in with a 6% climb. A 6% climb in sales was fine news—indicating consumers were feeling more optimistic and spending beyond bare necessities. Still 14% is substantially higher than 6%—indicating luxury had a special appeal.
     Now, survey research reported by the National Retail Federation documents that this same trend toward luxury continues. The research indicates it comes with a twist, though: In my opinion, your shoppers are likely to be looking to purchase luxuries they feel they’ve earned.
     The NRF-sponsored survey of more than 5,000 consumers was conducted last December by BIGresearch, so in the fast-changing world of retailing, the findings might be considered a bit old. Still, the implications are consistent with other data, so are worth your attention.

• Product and service categories such as hair coloring and a daily dose of gourmet coffee are considered justified luxuries more often than was the case a year ago.
• People want to eat out, but find it easier to justify going to casual sit-down restaurants than to white-tablecloth fine-dining locations.
• Categories such as magazine subscriptions, satellite radio, and maid service are considered unjustified luxuries.
• There are gender differences. Men are more likely than women to consider cable/satellite TV subscriptions and social memberships justified.

     Throughout this deep recession, the successful retailers have empowered shoppers to enjoy relatively inexpensive indulgences. Panera Bread offered specialty sandwiches and salads at a manageable price. Early on, Tiffany developed lower priced items to carry the luxury name, but for sale in mall stores that aren’t Tiffany’s.
     Some years ago, SRI Consulting Business Intelligence identified three major motivations for luxury quests:

• Luxury as functional. Pay more for products which are well-made, designed by craftsmen, or with features customized to the customer.
• Luxury as reward and show. Let others know that you are special.
• Luxury as indulgence. Pamper yourself with the best available comfort, even if the item isn’t built to last. Get the most powerful, the most roomy, and the most capable, even if it looks absolutely clunky.

     Offer to your target markets product and services which fit the shoppers’ definition of justified luxuries. Then in your advertising and personal selling, up the emphasis on “You’ve earned it.”

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Offer Fundamental Indulgences
Satisfy Desires for Luxury
Stay Ready to Sell Luxury