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G L O B A L R E T A I L C O N S U L T A N T S

J.C. Williams Group Limited 17 Dundonald Street, 3rd Floor, Toronto, Ontario M4Y 1K3. Tel: (416) 921-4181 Fax: (416) 921-4184 [email protected] www.jcwg.com

1230-1010 de la Gauchetière West, Montréal, Quebec H3B 2N2 Tel: (514) 510-0711 Fax: (514) 510-8071 350 West Hubbard Street, Suite 240, Chicago, Illinois 60654 Tel: (312) 673-1254

Member of the EBELTOFT GROUP - International Expertise in Retail Service Business

QuebecApparelRetailingEnsuringSurvivalina

HypercompetitiveMarket

October31,2012

ConferencePresentations

TerryHenderson,J.C.WilliamsGroup

JohnTorella,J.C.WilliamsGroup

MikeDover,J.C.WilliamsGroup

SURVIVAL STRATEGIES FOR QUEBEC APPAREL RETAILERS

Strategic Initiatives Retailers Need to Undertake to Survive and Prosper

Terry Henderson

October 2012

www.jcwg.com

Outline

Introduction

Concept

Process

Case Studies

Best Practices: Check List

2

Quebec Apparel Retailing Ensuring Survival in a Hypercompetitive Market

© J.C. Williams Group 2012 1

Perfect Storm

http://www.youtube.com/watch?v=gVwuy-4TzU8

3

4



http://www.youtube.com/watch?v=gVwuy-4TzU8

J.C. Williams GroupGlobal Retail Advisors

“Providing clients with actionable strategies to help drive their business successfully whilst meeting their customer’s needs”

5

Who We Are & What We Do Retail advisory firm with over 30 years of

industry experience

Offices in Montreal, Toronto, and Chicago

Clients across North America, Europe, Russia, the Middle East, India, and Asia Pacific

Senior partners have broad retailing, strategic planning, and customer service experience—we’ve spent our entire careers in retail

We work collaboratively with our clients ensuring they are active partners

Founding member of Ebeltoft Group, a consortium of international retail and service consulting firms

6



Member of Ebeltoft Group

Founded in 1991 to bring together International retail expertise

21 members located in 18 countries including Australia, Brazil, Canada, China, Denmark, France, Germany, India, Italy, Malaysia, Portugal, Romania, Singapore, Spain, Switzerland, Turkey, United Kingdom, and the United States

Ebeltoft Group members have collaborated on projects in over 50 countries

7

J.C. Williams Group PublicationsOur publications on retailing

• Re|Think Retail Branding: essential information and insights into the art and science of whole branding

• Getting Retail Right!: ICSC’s book on retailing and new approaches to shopping center revitalization

• Building a Winning Retail Strategy: dynamic marketing and operating strategies to ensure growth and profits

• National Retail Bulletin: monthly report on retail sales activity in Canada

• retaileye blog: retail trends, concepts, and best practices

• The Strategic Compass Model: coming soon!

8



We Serve the Top Companies of Our Industry 38 of the Top 100 retailers in the

World …

RETAIL

.

.

.

.

.

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29 of the Top 50 manufacturersworldwide … 15 of the Top 20

9

Clothing and Accessories

10



Strategy = Know where you are going?

Strategy – Keep It Simple

Source: Harvard Business Review September 2012 12



The Right Strategic Style for Your Environment


Retailers Like You Use The Adaptive Style


Zara

Internet & Catalogue Retail

Hotels, Restaurants& Leisure

SpecialtyRetail

Textiles, Apparel& Luxury Goods



Strategy – Direction and Improvisation

“Strategy is a sense of direction around which to improvise”

Peter Drucker

15

What Is Strategy? 3 simple Jobs

16



Strategy Jobs – Consistency Test is Key

17

External Environment

• Size up the external environment of a firm in its entirety

• External consistency: Does the strategy tap the opportunities and neutralize the threats posed by the outside world in a unique manner?

Internal choices

• Configure all of a firm’s choices to attain a competitive advantage

• Internal consistency: Do the parts of the strategy fit together to form a whole that is greater than the sum of the parts?

Competitive dynamics

• Sustain a firm’s competitive advantage over time

• Dynamic consistency: Does the strategy call on the company to do today what is necessary to succeed tomorrow?

Strategic Planning Roadmap

WhereAre We?

How Do We Get There?

Who Do We Want To Be?

Tracking Progress

18Source: McMillan Doolittle



Summary Steps and What We Do

WhereAre We?

How Do We Get There?

Who Do We Want To Be?

Tracking Progress

• Review prior work• Management interviews• Research review/New

research• Field visits• Desktop/Secondary Research

What We Do

SWOT

• Consumer

• Competition

• Economy

• Internal Competencies

• Industry

Where We Are

• Review prior documents• Understand company history• Workshop

What We Do

• As a Company

• Mission

• Vision

• Values

• Promises

• As a Competitor

• Brand Positioning

• Financially

Defining Ourselves

• Ideation• Priorities Screener• Working Teams

What We Do

• Key Objectives

• Markets

• Formats

• Strategies

• Organizational Need

• HR

• Technology

• Finance

• Logistics

• Timing/Timeline

How We’ll Get There

• Quarterly check-in

What We Do

• 5 Year Plan

• Measure exact objectives

• Measure progress

• Timeline

Tracking Progress

Source: McMillan Doolittle 19

Industry Analysis Influences – 5 forces

20



Five Forces Retail Specialty Apparel

21

Rivalry Among Existing Competitors

Industry positives:• Capacity does not need to

be expanded in large increments – store footprints can expand somewhat incrementally before major jumps in distribution capacity occur

Industry negatives:• Products and services are not

highly differentiated• Switching costs are low• Fixed cots are high and

competition can and does cut prices

• Some products are perishable in nature

• Rivals highly committed

Threat of New Entry

Industry positives:• New entrants with

value propositions can be very successful (e.g., Lululemon)

Industry negatives:• Economies of scale for major

retailers• Hot brands/stores draw

customers from others• Customer switching costs are

low• High capex requirements• Ecommerce and digital media

Threat of Substitutes

Industry positives:• Customers can’t do without

the product forever (except at nudist camps)

• Products provide a well-being that is difficult to substitute

Industry negatives:• Direct sellers – ecommerce• Customers can do without

the product for a period of time

• Customers can make some of the products themselves

Supplier power

Industry positives:• Major suppliers and agents

(e.g. Ly & Fung) are better capitalized and optimize the use of technology

• Willingness to support integration across the supply chain

Industry negatives:• Major suppliers have a lot of

power over smaller retailers (e.g. RE developers, Agents, importers)

• Switching costs related to changing suppliers

• Suppliers can integrate forward into industry

Customer power

Industry positives:• Customers switching costs are

low• Volumes are not concentrated

with relatively few customers• No backward integration threat

from customers

Industry negatives:• Clout and price sensitivity due

to:• Products relatively

standard• Customer switching costs

are low• Some customers are under

pressure to save money

Industry definition: Retail Specialty Apparel

ECONOMY - Take A Contrarian Approach

22



23

Internal Competencies Wal-Mart

24

M

a

rg

i

n

Primary Activities

SupportActivities

Operations

(e.g. Assembly, Component Fabrication,

Branch Operations)

Marketing & Sales

(e.g. Sales Force, Promotion,

Advertising, Trade Shows, Proposal

Writing)

Inbound Logistics

(e.g. Incoming Material Storage, Data Collection,

Service, Customer Access)

After-Sales Service

(e.g. Installation, Customer Support,

ComplaintResolution, Repair)

Technology Development(e.g. Product Design, Testing, Process Design, Material Research, Market Research)

Human Resource Management(e.g. Recruiting, Training, Compensation System)

Firm Infrastructure(e.g. Financing, Planning, Investor Relations)

Procurement(e.g. Components, Machinery, Advertising, Services)

Outbound Logistics

(e.g. Order Processing,

Warehousing, Report

Preparation

Wal-Mart Stores:Activities as the Locus of Competitive Advantage

Companies are collections of discrete activities, in which competitive advantage resides



Wal-Mart Value Chain

InboundLogistics

Operations Marketing& Sales

After-Sales Service

M

a

rg

i

n

Primary Activities

SupportActivities

FirmInfrastructure

Human ResourceManagement

Technology Development

Procurement

• Big stores in small towns => local monopolies, low rental costs

• Pricing that reflects local monopoly

• Concentric expansion

• Brand-name merchandise

• Private labels

• Little space for inventory

• Suggestion program

• Store within a store

• Traiting: tailoring merchandise to locale

• EDLP

• Low prices

• Store manager latitude on pricing

• Little advertising

• Merchandise meeting

• Frequent replenishment

• Automated DCs, cross docking, pick-to-light

• EDI

• Hub and spoke system

• Easy returns

• POS

• Satellite system

• Associates, not employees• Not unionized• Store manager autonomy

• Frugal culture (sharing hotel rooms, calling collect

• No regional offices

• Lots of management visits

• Store performance tracking

• UPC

• Hard-nosed negotiating

• Centralized buying

• No-frills meeting rooms

• Partnerships with some vendors

• EFT, electronic invoicing

• Planning packets

• Manager compensation tied to store

• Stock ownership plan• Decentralized training in DC

• Real-time market research

• Saturday meetings

• Fun working environment

• Promotion from within• Associate compensation tied

to company• Shrink incentive plan

25

Specialty Apparel Value Chain

26

Frugal culture – no regional offices – family culture – no strategic planning – business planning newly implemented – Private equity investor

Very low marketing

Good quality price ratio

No marketing strategy

Type of Advantage• Low cost structure, good

customer service (e.g. alteration services), good quality price ratio, site proximity

Activities

Inbound logistics

Operations Outbound logistics

Marketing& sales

After-sales service

Procurement

Technology development

Human resources

Firm infrastructure

Scope of Advantage• Customer scope:

– Young girls 15-18– Girls aged 17-24– Young Women 30-35– Women 36-45– Young Men 18-30

• Product scope:– Good quality moderately

priced “low” branded 3rd

party product which are latest commercial styles

– Leisure and sportswear– Casual workwear

• Geographic scope: – Regional and urban

markets• Vertical scope:

– Branded line buy

Centralized buying – improvements required in negotiation skills – buying concentrated with relatively few 3rd party branded suppliers

Limited salary equity – no unions in stores – unionized employees in dc (oct’10) – no formal bonus program – equity limited to senior management – salesperson compensation tied to sales only with complicated formulas, - limited management skills at sr management level – limited store mgr auth

Newly implemented back office system (tier3) – Aging POS – limited DC automation

Use of 3rd party logistics

DC premises is leasing has capacity constraints

No cross docking Frequent inter-store transfers

Varied store brands

Brand name merchandise

Little space for inventory

Increasing rental costs

HO space leased

Easy returns

Alteration services



Competitive Dynamics

27

28

Competitive Dynamics



Competitive Dynamics – Know Where You Stand

Strong

Weak

Weak Strong

Strategicposition

Financial position

Industry sensitivity to this downturn

More

Less

Lightenthe load

Full speed ahead

Refocus and retool

Overtake the

timid

Source: Winning in Turbulence 29

Less Industry Sensitivity

Strategicposition

Strong

Weak

Weak Strong

Financial position

Industry sensitivity to this downturn

Less

More

Refill the tank

Extendthe lead

MaydayPass withcaution

More Industry Sensitivity

Competitive Dynamics – Cross-Channel Game

Source: Deloitte Consulting LLP 30



Competitive Dynamics – Ebeltoft Cross-Channel Study

17 COUNTRIES

DIY Electronics Apparel Non‐food generalist Hyper/Department store

4 SECTORS

31

Competitive Dynamics – Ebeltoft Cross-Channel Study: 144 Retailers

32



Competitive Dynamics – Ebeltoft Cross-Channel Study: Objectives

• Provide insights on key issues to prioritize the right mix of cross-channel solutions; now and in the future

33

Competitive Dynamics – Ebeltoft Cross-Channel Study: Methodology

34



Competitive Dynamics – Ebeltoft Cross-Channel Study: Sectors and Countries Canada only has two retailers in the Global Top 10, and one of them is American

owned

General Retail DIY Electronics FashionRanking Retailer Country

1 Walmart US

2 Sears US

3 Nordstorm US

4 Debenhams UK

5 Jcp US

6 El Corte Inglés Spain

7 Macy's US

8 Coop Denmark

9 Falabela Chile

10 Auchan France

Ranking Retailer Country

1 Home Depot US

2 B&Q UK

3 Lowes US

4 Homebase UK

5 Flügger Denmark

6 Castorama France

7 Hombach Denmark

8 Leroy Merlin France

9 Lee Valley Canada

10 Hagebau Germany


1 Best Buy US

2 Conrad Germany

3 Fnac France

4 Media Markt Germany

5 Comet UK

6 Best Buy Canada

7 Boulanger France

8 Elgiganten Germany

9 Interdiscount Switzerland

10 Domo Romania


1 Finish Line US

2 New Look UK

3 J. Crew US

4 Sport Scheck Germany

5 Next UK

6 Mango Spain

7 YouHeShe Denmark

8 Goertz Germany

9 Traceveinny Singapore

10 KissJane Singapore

35

COUNTRIES INCLUDED

Competitive Dynamics – Ebeltoft Cross-Channel Study: Fashion Retailers Included

36



Competitive Dynamics – Ebeltoft Cross-Channel Study: Fashion Retail Cross-Channel Champions


18 MDS Singapore

19 Vakko Turkey

20 Reitmans Canada

21 Zara Switzerland

22 Zilian Portugal

23 Prenatal Italy

24 Zara Spain

25 Abercrombie US

26 Bestseller Denmark

27 Saba Australia

28 Globetrotter Denmark

29 Zara Italy

30 Lululemon Canada

31 Marisa Brazil

32 Zegna Italy

33 Roots Canada

34 Charles Vögele Switzerland

35 Diesel Italy

36 Desigual Spain


37 Schild Switzerland

38 Witchery Australia

39 Camaïeu France

40 Sarar Turkey

41 Bianco Denmark

42 Prada Italy

43 Uniqlo China

44 Desa Turkey

45 Samsoe Denmark

46 Beymen Turkey

47 Monnalisa (it) Italy

48 Meters Bonwe China


1 Finish line UK

2 New Look UK

3 J.Crew US

4 Sport Scheck Germany

5 Next UK

6 mango Spain

7 YouHeShe Denmark

8 Goertz Germany

9 Traceyeinny) Singapore

10 KissJane Singapore

11 Marks and Spencers UK

12Mountain

Equipment Coop Canada

13 Kiabi France

14 Gap US

15 Jules France

16 Anthropologie US

17 Forever New Australia

37

Competitive Dynamics – Ebeltoft Cross-Channel Study: #1 Finish Line

Channel Agnostic Shopping

38



Competitive Dynamics – Ebeltoft Cross-Channel Study: #2 New Look

Mobile

39

Competitive Dynamics – Ebeltoft Cross-Channel Study: J.Crew

Size/Product Online Exclusives

40



CASE STUDIES – COMMON THEME IS THETurnaround Tripod – What Comes 1st ?

Strategy

FinanceOperations

41

42



McDonald’s: 1997–2002 – A Brand in Decline 2002 - reported its first-ever quarterly loss of $344 million (since

going public in 1965). Comp store sales down in all major regions

Stock price in decline—down to a low of $12 in 2003 from $45 in 1999

Market share was declining, franchisees frustrated, employee morale low and customer satisfaction even lower

Focused on opening new stores, acquiring other concepts but not fixing the core

43

Creating the Plan to Win

New management team was brought in by the board in 2002

Created the Plan to Win to re-focus the business and re-store the brand’s dominance

Shifted focus away from new store growth to growing sales within the existing base

Followed a framework for brand revitalization:

44



RULE #1 : Refocus the Organization

• Brand Purpose and Goals• Financial Discipline• Operational Excellence• Leadership Marketing

RULE #2 :

Restore Brand Relevance

• Thorough Knowledge of the Market• Needs-Based Market Segmentation• Customer Insight• Brand Promise

RULE #3 :

Reinvent the Brand Experience

• Innovation• Renovation• Marketing• Fair Value• Total Brand Experience

RULE #4 :

Reinforce a Results Culture

• Measurable Milestones• Balanced Brand-Business Scorecard• Recognition and Rewards

RULE #5 :

Rebuild Brand Trust• Internal / External• Commitment and Behavior

RULE #6 :

Realize Global Alignment

• Plan to Win• Eight Ps : Purpose, Promise, People, Product,

Place, Price, Promotion, Performance• Freedom Within a Framework

Endu

ring

Prof

itabl

e G

row

th

Mor

e C

usto

mer

s, M

ore

Ofte

n, M

ore

Prof

itabl

e

45

Plan to Win

McDonald’s Then

46



McDonald’s Now

47

Plan To Win PayoffHistorical Performance of McDonald’s Corporation

Share P

rice

Source: Yahoo Finance 48



McDonald’s – Key Takeaways

The importance of disciplined and rapid planning, execution and measurement

Built off brand strengths and revitalized what needed to be addressed

Innovation can be simple

49



J. Crew – Resurrecting an Iconic Brand

J. Crew was founded as a catalog company in 1982

The company became synonymous with the “preppy” look and classic American fashion

In 1997, it was bought by Texas Pacific Group. Quickly following the purchase, the co-founder left and the company lost direction

At the end of FY2003, the company reported sales of $768 million, a net operating loss of $5.6 million and comparable store sales down over 11%

Mickey Drexler was hired as CEO in 2003 and began the company’s turnaround

51

Raise Fashion Levels, Raise Pricing

“I look at companies as price-players or quality-players. The only way to go with J.Crew was quality.”

Mickey Drexler

J. Crew’s is positioned to appeal to consumers who have graduated from Gap and desire something hipper, and less expensive than Ralph Lauren

Classic American style, with a twist became the design direction:• They ditched the old logo and added whimsical “critters”

• Added new linings and trim detail, and emphasized colors and unique fabrics

• They raised pricing and developed a multi-tiered pricing strategy for high-priced designer level goods and lower priced casual items

52



A Hot Brand Again – From 2005 until ??

It took nearly 18 months to affect the transformation, with FY ’04 also recording negative comp sales

Carefully pursuing brand extensions (Crewcuts) and flanker brands while steadily growing 25-30 new stores a year

Performance improved dramatically starting in 2005

53

$(5,636)

$(30,775)

$37,642

$79,497

$125,614

$172,479

$96,685

$211,261 $213,968

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Income from operations

$768,344 $689,965

$804,216

$953,188

$1,152,100

$1,334,723 $1,427,970

$1,578,042

$1,722,227

$-

$200,000

$400,000

$600,000

$800,000

$1,000,000

$1,200,000

$1,400,000

$1,600,000

$1,800,000

$2,000,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Revenue &

J.Crew Financial Performance

For the fiscal year ended January xx, xxxx 54



$349 $338

$400

$457

$526

$573

$551

$577

$601

2003 2004 2005 2006 2007 2008 2009 2010 2011

Sales per gross square foot & Comp store sales

J.Crew Financial Performance

-11.2%

-2.5%

16.4%

13.4%13.0%

5.6%

-4.0%

4.1%4.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011

For the fiscal year ended January xx, xxxx 55

J. Crew Case – Key Takeways –Weighing Risk/Reward Used brand attributes to resurrect the hotness without losing the

focus on heritage

Proved you can move up in fashion and price points..

Strategy takes time, involves risk and is never final• Needed to liquidate old inventory—losses accelerated in the first full year

• Takes time to develop new looks and get customers back in

• And then you start again ...

56



Best Practices Checklist

Have a clear and simple strategy

Have a clear and simple process to develop and update your strategy

Use an adaptive style whereby you can quickly update the key elements of your strategy

Test your strategy for external, internal and dynamic consistency

Dynamically understand the forces that affect your industry and your sector within the industry

57

Best Practices Checklist

Understand where you are in the economic cycle

No matter where you are in the cycle keep calm and carry on

Take a contrarian approach to investing and where you invest

Know where you stand within your industry in terms of your strategic and financial position and move accordingly

Ensure you know what activities create value and that as many as possible are integrated

58



Best Practices Checklist Have a plan regarding cross channel

Use as many of MCD’s rules as possible

Disciplined planning, execution and measurement are important

Innovation can be simple

Build off brand strengths and revitalize what needs to be addressed

Don’t try to be good at everything – select what to dominate on – and really dominate

Strategy takes time, has risks and is never final as advantages go away over time

59



EVOLUTIONPrivate Label to Private Brand

John Torella

October 2012

www.jcwg.com

2



Outline Introduction

Concept

Examples

Best in Class

Low Cost Basics

Process

Bottom Line Benefits

Best Practices: Check List

3

Introduction Private Brands have been outpacing natural Brand

sales growth in North America by 10-15%

7% annual growth rate over the past 10 years

Share has gone from 35% to 65%

Source: Nielsen. Private Brands study. 2009 4



81% of North American Shoppers feel Private Brands provide...

“extremely great value”

Source: Nielsen. Private Brands study. 2009 5

“Product differentiation through a strategy of Private Brands is one of the two/three

keys to retail success in the future”

-Terry LundgrenPresident & CEOMacy’s Inc.

“Product differentiation through a strategy of Private Brands is one of the two/three

keys to retail success in the future”

-Terry LundgrenPresident & CEOMacy’s Inc.

6



Concept Winning marketers are moving from Private Labels

and store Brands to the concept of Private Brands

Emphasis on “Branding” versus labelling

Totally integrated program of the company’s philosophies, reputation, people and products

7

Private Brands...

That create deep, emotional

connection with end consumer...

That have a distinct

personality that sets them apart...

That lead to loyalty and advocacy...

And customers for life!

8



“All Private Brands are products, but not all products are Brands”

- Millard “Mickey” DrexlerCEOJ. Crew

“All Private Brands are products, but not all products are Brands”

- Millard “Mickey” DrexlerCEOJ. Crew

9

Examples When customers buy gifts at Disney they are buying

more than gifts and Disney is selling more than products.

10



Ralph Lauren owns a piece of his customers’ minds in such a powerful way that they go from loyalty to lifetime advocates.

11

Kenneth Cole, Under Armour and Nike have achieved cult-like status and have become icons in their categories.

12



Best in Class

For more than 150 years Macy’s has been helping new Brands and suppliers establish themselves in the hearts and minds of their customers.

Macy’s portfolio of Private Brands is impressive: Alfani, Charter Club, Club Room, INC International Concepts, Karen Scott, Material London and Style & Co continue to thrive and outperform the marketplace.

In 2011, they introduced three new Private Brands: Tasso Elba, Anna Dello Russo, Greg Norman golf wear.

Private Brands represent about 20% of their total sales.

13

Macy’s “Believe” Video

14



Low Costs/Basics of Private Brands

Private Brands

Tracking of results; keep

upping the bar

Prominence on company website;

fresh, relevant content/style

Name, logo, symbol that is

unique and consistent with Brand essence

In-store support package that includes staff

product knowledge, POS

material, fixturing, packaging

Community/

social media engagement

15

1. Start with facts: how are you currently perceived: Your Image

2. Where do you want to go in the future:

Your Vision

3. 3 Keys:• What customer segment are you going to focus on?

• How are you going to be different?

• Positioning versus competition

4. Design your Brand of the future; benefits not yet perceived

Private Brands Process:

16



5. Identify added value: rational/emotional benefits beyond product function

6. Determine the one idea/word you want to own: Brand Essence

7. Dimensionalize the Brand: Brand Personality and Character

8. Establish DNA: Not the “what” or “how” but the “why” of the Brand

17

Brand Pyramid

Source: Whole Being Retail Branding, John Torella 18



•Loyalty•Advocacy•Trust•Engagement•Customers for Life

•Higher Margins•Lower Selling Price•Profitability•Lower Marketing Costs

19

Best Practices Check ListPLANNING Start with facts: information, research, insights

Top-level support/commitment/team

Strategic plan; 3-5 years

Defined objectives, strategies

Tactical execution plan of action

20



CATEGORY/ASSORTMENT PLAN Competitive review

Which category/SKU plan/process in place

Defined pricing strategy

Quality assurance, specs in place, samplings

Evaluation review

21

VENDOR MANAGMENT Identify vendors policies, objectives, standards

Selecting vendor options

Product specifications

Partnering opportunities: Marketing

Packaging design specs

Scheduled Review

22



IN-STORE SUPPORT Staff product knowledge/selling

Display, merchandise presentation plan

Fixturing, signing, ticketing

Cross merchandising

23

MARKETING PLAN Funding strategy; 3-5 years

Budget plan

Advertising: create/media

Website support

Social media

Events

Publicity

ROI24



Reinventing Your Company in a Customer-Driven Marketplace

Mike Dover

October 2012

www.jcwg.com

2



Key concepts

3

Data Overload: every 60 seconds…

•4 Million Web searches

• 500k Content Shares

•100k Product Shares

• 40k Links Shortened

• 40k Tweets Shared

4



The amount of data created per person

•After 5 years ...10 x

•After 10 years... 100 x

•After 20 years ... 10,000 x

Doubles every 18-24 months

5

Person of the Year

6



Harnessing Mass Collaboration

7

8



“Something you Own” “Something you Trust” “Something you Want”

“Something you Prefer” “Something you Love”“Something you Participate In”

The Changing Brand: Participation is the New Currency

9

“Brand building today is so different than what it was 50 years ago.

50 years ago you could get a few marketing people in a small room and decide, ‘this is what our brand will be’, and then spend a lot of money on TV advertising — and that was your brand.

Today anyone, whether it is an employee or a customer, if they have a good or bad experience with your company they can blog about it or Twitter about it and it can be seen by millions of people. It’s what they say now that is your brand.”

–Tony Hsieh, CEO, Zappos.com

Control of Your Brand Changes

10



Six Benefits of Wikibranding

Brand Advocacy (Marketing)

Word of mouth

Referral/recommendation

Badging

Sales/traffic

Reduction in media budgets

11

The Emperor's Fanbois

12




Brand Perception (PR)

Awareness/exposure/SEO

Affinity

Empathy/respect

Lead industry conversation

13

Old Spice Social Media

14



Customer Review Sites

15


Brand Content (Media/ Customer Experience)

Co-innovation/solutions

User-generated Creative

User-generated content

Reviews/ratings

16



Fan Participation

17

Prosumers – Doritos Crash the Super Bowl Contest

18



19


Brand Insight (Research and Innovation)

Idea stimulus

Beta-testing

Market research/polling

Industry/competitive

intelligence

20



Your Childhood Lego?

21


Brand Serendipity (The Unexpected)

Stories/Inspiration

Traditional media interest

Requires a good sense of humour

22




Brand Support (Customer service)

Customer service

Education/ advice

Value-add experience

Lead industry conversation

23

Intuit: B2B Community Wikibrand

24



Channeling Tom Sawyer

25

Culture Change Required

26



Retail Store as Showroom

Best Buy declining results due in part to Amazon operating as low-cost alternative. Easy search allows users to try out merchandise in store, then find the lowest price online

27

Mobile Social Helps In-Store experience

28



Trend: Social Shopping

29

Trend: Click and Collect

30



Trend: Exclusive Social Offers

31

Trend: Gamification in Retail

Users create fantasy wardrobes from real retailers and share them on platforms such as Facebook Rewarded with virtual

prizes (badging) and have the opportunity to win actual items ranging from an expensive handbag to vouchers from real stores

32



Trend: Community, not just Commerce

33

COMMUNITY MANAGEMENT“who will lead the conversation?”

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#1 - Company culture #2 - Lack of executive/managerial support #3 - Too controlling #4 - Lack of authenticity/genuine engagement #5 - Lack of community leadership #6 - Ineffective measurement #7 - Lack of relevant skills of people involved #8 - No clear purpose #9 - Lack of ongoing strategy/plan #10 - Lack of investment

Source: Agent Wildfire 2010 Community Management Survey

Organization Hurdles

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Top Skills of Wikibrand Leaders 1. Leadership/charisma

2. Diplomacy/Patience

3. Customer/member empathy

4. Persistence

5. Social/Networking

6. Communication Skills

7. Technology Skills

8. Passion for company/brand

9. Change Agent

10. Creativity

11. Leads the lifestyle of the customer 36Source: Agent Wildfire 2010 Community Management Survey



Key Takeaways

Customer expectations are higher than ever

Active listening and data analysis is crucial in every industry

If you ask for a conversation, you must participate

Measure the applause not the attendance

Harness cognitive surplus

With each trend, ask how can I use this for competitive advantage?

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The Retail Shop.Toronto, Montreal, Chicagowww.jcwg.com(514) 510-0711Terry [email protected]

Thank you and keep in touch.



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