retail

Taking a leap into the future

Posted on by karla30121f14

Cash, credit card or apple pay, are you ready to ditch your wallet?

appley pay intoApple Inc. Reveals Bigger-Screen iPhones Alongside Wearables

When CEO Tim Cook announced Apple’s digital wallet method in early September he didn’t go into great detail about the security aspects of Apple Pay. Although a lot of people may be hesitate on using Apple Pay it turns out Apple Pay is safer to use than ordinary credit cards.

This is how it works, it lets you use and store your credit cards just by scanning your phone. The technology that sends the payment from your phone to the register is called NFC (near field communication) it’s basically an antenna inside your phone that delivers short encrypted radio waves with your payment data.  NFC has been around for a while it has been used in Google Wallet, PayPal, and Pay Express.

It’s a lot harder to steal data from NFC because your phone doesn’t give up your credit card number; instead it uses a one-time use code that gets approved by the bank for every transaction. Even if hackers managed to hack their way into a store and grab this payment data its useless to them because a code can only be used once, plus even if someone where to steal your phone you can actually wipe all the credit cards remotely.

apple pay

Unfortunately not all stores that once accepted mobile payments options are accepting Apple Pay. Stores like CVS and Rite Aid have stopped accepting Apple Pay for two reasons.

  1. The first being is that they developed their own payment method called CurrentC, it’s designed to one day let you pay at the register without using your credit card. Wal-Mart led the effort to CurrentC along with Target, Bed Bath& Beyond, Dunkin Donuts, Gap, Sears, Shell, Wendy’s and many more have joined it. It’s really no surprise that none of these stores are accepting Apple Pay.
  2. These stores feel that Apple Pay is giving more power to credit card companies. Every time you swipe your card, retailers have to pay the credit card companies between 1.3 to 3 percent of every transaction. Apple Pay relies on credit card networks so if Apple Pay grows, it would allow Visa and MasterCard to get stronger and the fees would stick around.

Questions:

  1. Do you think people will find it difficult to put trust in Apple, after the continuous iCloud hacks that have been going on with celebrities?
  2. Why do you think retailers are so afraid of Apple Pay?
  3. Do you think it’s okay for stores like CVS and Rite Aid to deny the use of Apple Pay even though these companies can handle the tap to pay technology?

 

http://blogs.wsj.com/totalreturn/2014/11/04/why-some-merchants-say-no-to-apple-pay/

http://money.cnn.com/2014/10/27/technology/security/apple-pay-cvs-rite-aid/index.html?iid=SF_T_River

Lululemon’s Potential Competitor May Have An Advantage Due to Product Recall

Posted on by gina30111f14

kit

Lululemon for anyone that doesn’t know, is an athletic apparel store for, men and women, mostly dedicated to yoga-wear and workout clothing, but slowly moving into the day-to-night market as well. They have been extremely successful in the workout retail division, especially for women who enjoy yoga or wearing yoga attire. Lululemon is also known for having yoga, running, weight training and other fitness classes for the public to attend.

Although Lululemon has grown into a global business from one store in 1998 in Vancouver to over 270 locations worldwide, every company has it’s period of decline. For Lululemon it was when  in March of 2013 due to their recall on leggings for being too shear, this caused a large sales reduction for them and other issues as well.

A new company called Kit and Ace has been introduced into the similar market of Lululemon. The founders of Kit and Ace are entirely backed by the founders of Lululemon due to a large issue in the Lululemon board of directors. Kit and Ace is still in its introductory stage as a business, but they plan to grow globally and appeal to the same target market as Lululemon.

I found this article to be extremely relative to what we are learning in class when it comes to quality control and operations strategy in a global environment. Dealing with quality control is definitely a topic that relates to Lululemon and their product recall. We learned the importance of implicating quality for companies because it can help or hinder a company’s reputation, which in this case the lack of quality on hundreds of thousands of leggings has definitely hindered Lululemon. It caused many customers from all over the world to lack confidence in their product and be cautious when it comes to purchasing this product. Kit and Ace is definitely going to use the quality control issue of Lululemon to help improve their own quality control and it’s possible that customers will become more loyal to them instead.

One thing that Lululemon has over Kit and Ace without a doubt is their operational strategy with expanding their company globally. Lululemon has a globally known name, it’s not just a Vancouver store, it’s grown into a well known company in all different countries. Lululemon realized how important it was for them to globalize because they saw it would improve the supply chain, reduce costs, improve operations, understand markets, improve products, and attract and retain global talent. Rather than staying a locally known store, they now have facilities closer to unique resources in different countries. They have reduced costs with lower direct and indirect costs with foreign locations. Lululemon’s competitive advantage is definitely differentiation because they chose to use unique material to create their products which have attracted customers who are into not only fitness but comfortable everyday wear as well. Kit and ace will need to work on global expansion by using the experienced and professional operational strategy of Lululemon.

 

Have you ever had anything recalled that you’ve owned? If so, did that recall cause you to think differently about the company?

How important is quality control to a company?

Could there be a competition between Lululemon and Kit and Ace now with customers cautious about Lululemon products?

http://www.foxbusiness.com/industries/2014/10/28/lululemon-founder-family-bets-on-casual-luxury-with-new-retail-venture-1029564423/

The Ressurection of Spikeball

Posted on by tania30113f14

Have you ever heard of Spikeball? Spikeball is a sport that is becoming more popular in the United States. Spikeball is basically a combination of volleyball and foursquare. It’s a very easy game to play all you need is two teams of two people and the net. Spikeball is very portable it can be played in the backyard or on a beach.  If you purchase the product, which retails around $50 you will receive a trampoline like net which is a couple of inches off the ground, and a palm size ball. Basically, players stand around the net each team has up to three hits to transfer the ball to the opposing team. The purpose is to hit the ball into the net so the opposing team can’t return it. The winner is the team to get to 21 points first.

Chris Ruder is the founder and CEO of Spikeball. He first came across Spikeball in the 1980s when he purchased his very own Spikeball from Toys R Us. Ruder would always get the same question when people saw him playing Spikeball with his friends. The questions included, “What’s that game? How do you play? Where can I get one?” this were all simple questions but the last one because Toys R Us didn’t sell Spikeball anymore. That’s when Ruder had the idea to make Spikeball his own. Spikeball Inc. sold their first set in 2008 and Toys R Us was not involved. After having great success and growth Ruder quit his day job to focus on Spikeball. Spikeball has become more popular and has become a popular new sport. There are many tournaments in which people can compete in all over the United States. The top places are Chicago and Nashville. Other places include Los Angeles, New York, Georgia, and Iowa.

What makes this company interesting is the fact that how Ruder took Spikeball which seemed to be dying out and making it into something bigger. Ruder had no money to be able to advertise his product but it made it grow by simply going to the beach and people see him have fun. The game was originally trying to target a younger age group but Ruder realized that the target was not the correct target for Spikeball he believed that it was more for an older age group instead of kids. Ruder had to be in charge of everything that had to be done. He had to deal with inventory, customer service, and e-commerce. He had to be able to manage everything that had to do with improving Spikeball and making it known. He would also like to email customers that made purchases and ask them how they learned about Spikeball. By emailing the customers Ruder was able to receive better feedback regarding his product.

Have you heard of Spikeball before?

Would you try to play Spikeball?

http://www.dnainfo.com/chicago/20130730/lincoln-park/chicago-based-spikeball-exploding-popularity-nationwide

http://www.esquire.com/blogs/news/spikeball-toy-to-sport

http://spikeball.com/

 

Honey, I Shrunk The Inventory

Posted on by yuri30131f14

Working at T-Mobile I learned a lot about Operations. I learned that T-Mobile’s inventory has more items than just phones. It contains items such as handsets, covers, headphones, chargers, and other accessories. The inventory is counted at least once a month and the process involves manually counting each SKU (Stock Keeping Unit) in the front of the store and in the back of the store where the inventory is locked. After each count the result is compared to the inventory at the beginning of the month plus new-ordered inventory minus the sales and minus all the items that have been returned for various reasons. In theory the manual count should equal to the remaining inventory on file, but in real life it doesn’t happen.

Honey, I shrunk the Inventory

In real life the store manager uses personal judgment when opening large business accounts and he is able to give some SKUs for free. Sometimes when the employees sell or return the SKU they may accidentally scan a different SKU (each color or pattern of the certain cover has its own SKU!). Sometimes the returns are not scanned correctly, and sometimes it happens that a phone cover falls under a closet. In real world there is a certain percentage for which the loss is acceptable.

When the loss of inventory is bigger than a set percentage it becomes an issue. That may indicate that there is theft in the store, or mishandling of inventory or perhaps just plain incompetence. The steps to fight the high “shrink” percentage include a weekly count of the inventory, daily reports, probations and write-offs for the employees who are caught for scanning wrong items at POS or not scanning them at all. The store managers are being judged by the “Shrink” metrics, their salary and performance reviews can be seriously affected by the higher percent of “Shrinkage”.

Another metrics that affects managerial performance is traffic conversion. It is measured on daily and monthly basis and it’s designed to measure sales productivity. Each store has a device mounted inside of the store, just above the door, and it measures the number of people who walk-in. Then the number of sales is divided by number of “walk-ins” and that ratio represents the sales conversion rate. A low conversion rate shows low productivity and it means that the store manager should step up his game.

One of the ways to fight a low conversion rate is to make sure that the sales associates talk about current promotions. That they look at the customer’s account to see if the customer has any type of need and that need has a solution in a form of a product they can offer. That the employees are asking the customer the right questions that may help discover other needs. So next time when you are paying your bill or buying something at your carrier’s store consider whether or not you think of the sales representative’s questions as product pushing or simply discovering customer needs.

Brick and Mortar Can’t Float in the Amazon

Posted on by arman30123f14

http://upload.wikimedia.org/wikipedia/commons/thumb/f/f5/Best_Buy_Logo.svg/300px-Best_Buy_Logo.svg.png

http://www.insidemobileapps.com/wp-content/uploads/2013/03/amazon-logo-250-250.jpeg

With the recent advancements in technology, electronics, and the internet, consumers have begun to take completely different approaches to browsing, shopping, and acting as consumers. What was once the largest, and considered most financially sound, consumer retail store of the 90’s and 2000’s, has now turned into a thing of the past.

Best Buy, a store where consumers go to purchase electronics (i.e computers, cell phones, tablets, CD’s, DVD’s) has recently become the subject of many discussions regarding whether the consumer giant can stay afloat. Amazon Inc, an online e-commerce retail website, where items can be found in minutes, purchases made in seconds, and products delivered in hours/days, has rapidly taken over the electronic/technology retail space that Best Buy had once almost monopolized.

Best Buy started as the only game in town, where people could visit, shop, receive helpful advice, and bring home their devices with protective warranties. However, internet retailers such as Amazon.com and Ebay have entered the same market as Best Buy, with lower overhead costs, more convenience, quicker purchases, and better warranties, and it has seriously put a dent in Best Buy’s future outlook.

Each of the Best Buy stores possess large overhead costs which include the likes of labor, utilities, product inventory, management, and building tax/mortgage. Not to mention, Best Buy has to deal with in-store and corporate operational management, budgeting, inventory forecasting across all of their brick and mortar stores, and labor hour allocation issues in each establishment. Amazon, which does not have any stores and ships only from warehouses, also possesses some operational management difficulties but certainly not on the scale that Best Buy does.

It might be the overhead that is making Best Buy have a hard time staying above water, or it might be the dwindling brick and mortar retail industry, but one thing is for sure, consumers are preferring online shopping over getting in their cars and driving to the store. In fact, Best Buy has recently reported that consumers now only use their store as a showroom, or in other words, a place to test the devices before they decide to purchase them on Amazon (Consumerist.com).

In their article “Amazon is Eating Best Buy’s Lunch”, CNN states, “The electronics retailer reported quarterly sales Tuesday morning that were lower than a year ago and below Wall Street’s expectations. The main culprit? Tough competition from online retailers”.

Perhaps there are some ways that Best Buy could improve their sales while still competing with the titans of the internet retail industry.

What are some ways you believe that Best Buy could bounce back from their poor 2014 performance and stay afloat?

Describe your experiences with Best Buy and explain why it may/may not be completely out of business?

What ways could Best Buy improve their operational management structure?

Why do you think that Best Buy remains in business despite the heavy consumer preference for online retail websites?

List some examples of operational management strategies that Best Buy could take advantage of but you believe are not being used properly.

 

http://money.cnn.com/2014/08/26/investing/best-buy-earnings/

http://consumerist.com/2013/11/04/best-buy-is-just-daring-you-to-use-stores-as-an-amazon-showroom/

 

 

Optimize, Don’t Compromise!

Posted on by yuri30131f14

For a while I worked on the retail side of a major wireless company. My job was mainly sales with a slight touch of customer service, or at least that is what I thought. We would come in to the store, have our morning meetings, deal with customers, sell headsets and services, and go home. After a while I was starting to get bored and I decided to shadow my manager to experience a different side of retail sales. During my shadowing I learned a lot about how T-Mobile manages input units such as labor, how it handles its inventory, the metrics it uses to identify inventory problems in specific stores, and what T-Mobile does to optimize the process. In this bog I would like to share my encounter with Process Optimization at T-Mobile.

Once I came to work to find a team of people who were standing and looking over what we were doing. We were told to do everything as we usually do from opening the store to closing; they were with us for the entire process. The method was very close to what we had in our first class where we had an assembly line and where we were making puppets out of paper. The people who were monitoring us had timers with them, as we had in our class, and tablets where they recorded everything that we did, including bathroom and lunch breaks. Now as I think about it, it makes more sense, and I understand that they were trying to identify the specific tasks in our workflow that were taking the longest. Later that data was most likely analyzed for purpose of identifying steps that could be eliminated or combined.

 

The evaluation team was there during the weekend only. They were following us from Friday to Sunday. The only thing that I didn’t understand was why it was done only during the weekend. Fridays and Sundays are the busiest workdays and if the evaluation process were up to me I would have had this done during the weekday. The reasons for this is because if you compare it to a yearly cycle, they were measuring our productivity during the busiest time of the year for any retail location which starts in September and ends in January. Which means that their measurements would not reflect the actual process since it is not seasonally adjusted. The problem is that many important decisions in Operations Management will be made from the data gathered and this data may not show the real picture of stores productivity.

Another important matter that I noticed was the qualification of the team that visited us. T-Mobile hired temporary workers from Craigslist to do that job. Most of them were between 25-35 years old. Do you think they understood the importance of what they were doing and how it could affect the company?

Retail Job Management Issues

Posted on by virginia30123f14

For about a year and a half, during the end of high school and the beginning of college, I worked at GameStop. During that time I had three different managers and many different assistant managers. After learning more about operations management, I can reflect on what my managers did well and did poorly. Some of the things that were managed poorly explain why I did not enjoy working there a lot of the time.

One of the main issues at GameStop was what tasks were seen as higher importance than others. As an associate, my job was to work the register and to organize and put away games on the shelves. I found that the other associates would waste their time chatting while I was always sure to work on organizing games when I was not at the register. Whenever I would work, the store started off as a mess and I would get it organized while I was there. The problem here was that no one was being told that they should stop standing around and actually put games away. My managers would always complain to me that the other employees would not organize well, but did nothing about it.

Although I was always on task, I ended up being told that I was not doing well because my sales numbers were not high enough. Some days I would get great numbers, but other days I would not, which showed that what customers buy is not completely dependent on me and how I sell the game, but much more the customers decision. I do understand that selling the games and memberships is of high importance, but I think my managers could have focused on more than just numbers when it comes to employee reviews.

These complaints bugged me and gave me less motivation to work hard, but what I really thought was a poor decision was how my manager decided to schedule me and the other employees at my level. It was clear that I was better at organizing the store and that the other associates were better at selling. Since my numbers were not great, my manager decided to put me on the schedule for busy nights so I could get better at selling, thus pushing the other employees to less busy days. While it is good to learn and get better at what we are not good at, I think it would have made much more sense to put me on the less busy nights so I could focus on getting the store organized and fixing and cleaning up what other employees had organized poorly. The result of the new schedule was that the store was a mess because I had no time to clean it and we did not get great numbers because I was not skilled at that.

Do you think it is more important to have employees improve on what they are not good at or is it better to delegate tasks according to skill level, in order to have higher productivity levels?

The Fast and the Furious

Posted on by cristian30111f14

ZaraMelbourneOpen016

Recently, I spoke with a former retail executive and got into the topic of fast fashion. I learned some interesting facts about the industry and think it’s a great topic to discuss. I bet that many of us have been to or purchased from fast fashion retailers such as Zara, H&M, or Forever 21. Do you ever wonder how they are able to mass produce some of the trendiest pieces and sell them at such low costs? Well, you will now get an idea of how they do it and how these retailers have become so successful.

Two words that come to mind when talking about fast fashion’s success: Speed and Volume. Zara, fashion retailer based out of Spain, can design, manufacture and get new product into their stores in less than a month’s time. How do fast fashion retailers do this? According to the former retail executive, they have workers go to Italy, France, or wherever they are taking fashion trends, purchase designer garments, and take them to a mass producer in countries such as China or Korea. The manufacturers copy, but alter the piece in 9 different ways, to avoid legal troubles, and then mass produce the new items. Companies might have different strategies, but that is a prime example of fast fashion.

Many of the retailers mentioned do not only provide speed, but they also provide volume. In 2013, Zara produced around 450 million garments for its 1,770+ stores. I can only imagine how much H&M produces with its 2,629+ stores! As these retailers are able to mass produce with low wage manufacturers, they are able to offer their clothing at dirt-cheap prices. Many retailers, such as Forever 21, are then able to charge less for their clothing as they have their manufacturers produce with cheaper, synthetic materials. With prices so low, consumers like you and I find ourselves leaving these stores with at least one item and usually fall into the dilemma of not bothering to make our way back to the stores to make a return.

It is evident that fast fashion’s quick and efficient supply chain management is crucial to their success, but there has to be some downside to the system, right? Since most of the products coming out of these retailers are cheaply made, it is without a doubt that these garments are not going to last forever. As some of you know, some of these garments won’t even last 2 or 3 wears. It is a pain, but at such low prices, what can you expect?

Food for thought:

Can you think of any possible flaws in the fast fashion system?

From a consumer’s standpoint, are you willing to give up quality for quantity?

From an ethical standpoint, what do you think about retailers exploiting low wage workers overseas?

 

Sources:

http://www.businessweek.com/articles/2013-11-14/2014-outlook-zaras-fashion-supply-chain-edge#p1

http://www.npr.org/2013/03/11/174013774/in-trendy-world-of-fast-fashion-styles-arent-made-to-last

http://www.usnews.com/opinion/blogs/economic-intelligence/2012/09/21/the-wasteful-culture-of-forever-21-hm-and-fast-fashion

Fast Fashion to Hit the U.S.

Posted on by spr1321mbator

 

H&M Hennes & Mauritz AB is a Swedish retail clothing company that is known internationally for its affordable fashion for men, women, and children. With 2,776 stores in 48 markets, H&M has been ranked the second largest clothing retailer in the world. Though the clothing company has gained a reputation for being fashion forward, the same cannot be said about its ability to keep up with online shopping demand. H&M currently offers online shopping to customers in just eight of its 48 markets around the world: Sweden, Norway, Denmark, Finland, Germany, the Netherlands, Austria, and the United Kingdom, but none in the United States. This has U.S. customers scratching their heads in confusion and growing impatient. The retailer stirred up excitement back in January 2011 with a tweet that stated:

“Good morning is an understatement! H&M has decided to have online shopping in the U.S. at the turn of the year 2011/2012! Stay tuned for more.”

Unfortunately, two years have passed and H&M has failed to deliver on that promise. The retailer is still “not set up for mail order, phone orders or e-commerce at the present time”. However, there is still hope for U.S. customers. H&M’s 2013 Expansion Strategy revealed: “Investments will also continue within online sales. H&M plans to launch online sales in the US, the world’s largest market for e-commerce.” Business Week also reported that shopping from H&M’s website could happen as early as Summer 2013.

Entering the U.S. online retail market goes beyond satisfying millions of America’s fashion lovers. “The U.S. online retail market is the biggest in the world; research firm Forrester estimates it will reach about $260 billion this year. Taxes vary by state, shoppers expect free shipping, and returns are common”. The process is quite complex and H&M has cited “issues with security, customer service, logistics, and the assortment of items offered” as reasons for delay. But the longer the retailer waits, the more demanding customers become. Not only are U.S. customers looking for the ability to shop online, but they are also expecting the company to have smartphone applications available, too. H&M says they will meet this demand. For investors sake, H&M cannot disappoint  because the company’s competitors have already figured out how to engage their U.S. customers in online shopping.

With just a few weeks left till summer, anticipation for the launch of H&M’s online store will grow largely. Having only photo galleries of tasteful, trendy clothes and accessories will not be enough for die hard shoppers this year and if the project fails to launch, there could be dreadful consequences for the company. In ending, some important questions to consider are: Do you think H&M waited too long to enter the U.S. online market? Is this expansion strategy necessary in today’s retail industry? How do you think launching an online store will affect H&M’s competitors?  Finally, on a scale of 1-10, how important is online shopping for you? Does it affect the way you shop?

 

SOURCES

Business Week: http://www.businessweek.com/articles/2013-03-28/h-and-ms-online-troubles-u-dot-s-dot-shoppers-are-still-waiting

H&M Expansion Strategy: http://about.hm.com/AboutSection/en/About/Facts-About-HM/About-HM/Expansion-Strategy.html#cm-menu

Annual Report: http://about.hm.com/content/dam/hm/about/documents/en/Annual%20Report/Annual-Report-2012_en.pdf

Financial Woe is Me

Posted on by w13kristen

The recent recession and high rate of unemployment have impacted spending habits around the world in a variety of ways.  This economic period has forced many people to cut back and alter their spending habits.  Fear, a difficult emotion to overcome, has entered the picture.  A downturn in the economy can encourage people to return to a simpler lifestyle.  Financial choices become more sensible and deliberate, and for many, it is unlikely that these spending reductions will be reversed.  “Even when prosperity returns, 60% predict they will continue to spend less money than they did before” (http://www.socialmediaexplorer.com/digital-marketing/will-the-recession-change-our-buying-habits-for-good/).

 

Table courtesy of http://www.strategy-business.com/article/12401?gko=abe86

 

What is the complexion of the post-recession shopper? 

 The average consumer will shop at stores with lower prices even if it isn’t convenient.  Consignment and resale shops have become more popular during the recession, and 99.6% of consignment shoppers plan to continue to shop at these locations (http://www.prweb.com/releases/prweb9843676.htm).  For those who are tired of sacrificing, a “do-it-yourself” solution may be the answer in order to obtain more expensive products at a lower price.  Online sales continue to increase which greatly affects the retail sales market.  Consumers are beginning to adopt a new and very conscious set of standards. 

What does this mean for the retailer?  The new consumer values deals, promotions, and reward programs.  Savings-related information must be easy to navigate and readily available.  “Retailers should review the number of price points and optimize the numbers of gaps between price points in each category” (http://www.strategy-business.com/article/12401?gko=abe86).  Private labels, used frequently during the recession, are now considered to be on par with the well-known brands.  Consumers feel that these private labels are “good enough,” as opposed to a prior mind-set making premium brands a must.  Consumers are able to go on-line to research and compare products before purchasing.  It is imperative to engage shoppers in the full path from purchase to home and in-between  (http://www.strategy-business.com/article/12401?gko=abe86).

It is not only important to understand consumer purchasing trends, but to also understand what psychologically drives his or her behaviors.  Frugality is a learned behavior, and learned behaviors are difficult to change.  Often times, these behaviors turn into habits (http://www.wbiconpro.com/06-Priya.pdf).  Shopping has taken a more disciplined, thoughtful approach with less impulse and more reflective research before purchasing an item.  Spending to excess is no longer in vogue.

Will focusing on promotions, better values and incentives, and the right demographic be the answers to capturing the competitive retail sales market?  How else can retailers better address this new value-driven environment?  Shoppers have found a new “normal” and they aren’t looking back.

 

Sources:

http://www.prweb.com/releases/prweb9843676.htm

http://www.pwc.com/us/en/retail-consumer/assets/the-new-consumer-behavior-paradigm.pdf

http://www.socialmediaexplorer.com/digital-marketing/will-the-recession-change-our-buying-habits-for-good/

http://www.strategy-business.com/article/12401?gko=abe86

http://www.wbiconpro.com/06-Priya.pdf