Tuesday, January 19, 1999
Retail key: Make your own mark
Marketing, price part of package
BY LISA BIANK FASIG
The Cincinnati Enquirer
NEW YORK — Blue jeans are blue jeans if they're sold in Hamilton or Helsinki, so getting them onto a shopper's bottom means developing them into something altogether distinctive.
For retailers, the best way to elevate the ordinary is to differentiate. Think of The Gap, which made jeans and T-shirts the look of a generation. Think of Target, which put cachet in off-price shopping.
To succeed globally, which includes selling on the Internet, a retailer must set itself apart in a way that customers value. That was the message at the opening sessions of the National Retail Federation's 88th Annual Convention and Expo in New York on Monday.
“My sense is that sometimes we're not quite aware as retailers what customers perceive as value,” said R. Brad Martin, chief executive of Saks Inc., parent of Saks Fifth Avenue and Parisian. “This business of one-size-fits-all doesn't work anymore.”
Rather, said Mr. Martin and other retail experts, a retailer must know what its customer wants regardless of where that customer is. Saks, for example, has no immediate plans to expand overseas, but is capitalizing on the opportunities it sees within the United States.
Retaining any market share goes beyond simply selling blue jeans. It involves the way jeans are displayed, the acceptability of the sales people, the significance of the store to the shoppers and the value of the brand. In short, it means being seen as an authority, said Mary Tolan, a global managing partner of retail industry practice at Andersen Consulting.
And while price is persuasive, the panelists warned against marketing on price alone, in the United States or abroad.
“It's a vicious cycle,” said Myron Ullman, former Cincinnatian and group president of Selective Distribution Group, a division of LVMH luxury goods company. “We ought to use our operating levels to offer something distinctive — more service, more value.
“If a customer can't describe for you why they come to a store, you have a problem.”
The same kind of innovation is necessary to succeed on the Internet, which retail observers are calling an unignorable force in retail. Mr. Ullman expects online purchasing to represent 20 to 25 percent of retail sales in the next five years. Now, it represents less than one percent.
Said Walter Loeb, a respected New York retail consultant: “I personally believe the Internet has made more companies aware of internation al opportunities.”
But do upsets in foreign economies represent an obstacle to entering them? Richard Fisher, chairman, executive committee and director of Morgan Stanley Dean Witter & Co., doesn't think so. Periods of stress such as those in Asia and Brazil will continue, he said, but with lesser impact. In the long run, overseas markets should represent opportunity, not downward cycles.
But Mr. Fisher advised retailers to understand and then commit to the investment involved in establishing a foreign market. It takes a lot of money and time, and that is a hardship for stockholder-conscious retailers.
“You can't keep pulling up the tree and looking at the roots to see if it's working,” he said.
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