Top_100_Consumers Weigh in on the Top Brands in Four Categories

8/18/2019 Top_100_Consumers Weigh in on the Top Brands in Four Categories

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Consumers weigh in on the top brands in four categories,including overall customer experience.

Sponsored by


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Sponsored by Sutherland Global Services

http://www.sutherlandglobal.com/retailhttp://www.sutherlandglobal.com/retail


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The 2015 RetailCustomerExperience.com Top

100 ©2015 Networld Media Group LLC. 13100

East Point Park Blvd., Louisville, KY 40223.

(502) 241-7545. All rights reserved. No part of

this publication may be reproduced without

the express written approval of the publisher.Viewpoints of the columnists and editors are

their own and do not necessarily represent the

viewpoints of the publisher.

Publisher

Kathy Doyle

VP, Networld Media [email protected]

Editorial Director

James Bickers [email protected]

Contributors

Robin ArneldSteve Kaufman

Richard Slawsky

Gregory Sharpless

Custom content editor

Tiffany [email protected]

In previous years, when we’ve published our Top 100 list,

it was literally that – a list of 100 retailers and brands,from 1 to 100, chosen by our readers. This year, we

thought we’d do things a little bit differently. We

decided to break it up into four separate lists of 25,

based on different criteria. It would be interesting, we

said in our planning meetings, to see which different

retailers are excelling at which different aspects of the

shopping experience.

I don’t think any of us really expected the same retailer

to sweep all four, but that’s exactly what happened. In all four of the

categories we identied – best customer service, best online experience, best value for

the price and best overall customer experience – Amazon took the No. 1 spot with our

readers.

The impact Amazon has had, not only on retail but the world in general, really can’t be

overstated. It is a force of nature at this point; economist Paul Krugman recently said

the retailer behaves in ways that recall the robber barons of old, saying it “has too much

power, and it uses that power in ways that hurt America.” Others are more subdued in

their critiques, but no one will take issue with the notion that Amazon has changed the

world. We will leave the argument about “for better, for worse, or both” to you.

Thank you for reading Retail Customer Experience, and for downloading this special

report. And thank you to Sutherland Global Services, whose sponsorship allows us to

provide it to you at no charge.

James Bickers

Senior editorRetailCustomerExperience.com

About the Sponsor: Established in 1986, Sutherland Global Services is a global provider of business process

outsourcing (BPO) services. Headquartered in Rochester, N.Y., Sutherland employs over 30,000 professionals

worldwide. Sutherland’s smartRETAIL suite includes technology-enabled services to provide sales, customer

care, technical support, back ofce and customer experience solutions to traditional and online retailers.

Sutherland is consistently ranked by our clients and leading industry analyst rms as one of the global BPO

leaders serving the Retail industry. For more information, visit www.sutherlandglobal.com.

Introduction

Table of ContentsOverall winner 4-8

Best customer service 9-20

Best online experience 21-36

Best value for price 37-48

Best overall customer experience 49-60


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Amazon.com has succeeded in rewriting the rules of

retailing without opening a single store.

Its projected $89 billion revenue for 2014 and its 20 percent

share of the entire e-commerce market (expected to

exceed $300 billion in 2014) are impressive. But the real

game-changer has come in the way Amazon is altering the

practices of brick-and-mortar retailers and changing the

way they do business.

“Most people shop for either convenience or value, and

Amazon has mastered both,” said Peter Dixon of Prophet,a New York-based retail consulting rm. “Everybody’s

trying to nd the sweet spot, but Amazon executes. It has

become a simple one-click process, and your goods are at

your doorstep the next day.”

In the Amazon world, it no longer is enough for a traditional

retailer to have a website. The site must be fun, informative

and easy to navigate and shop. And the retailer’s

backroom operations must be geared to deliver those

orders quickly, accurately and inexpensively.

Consumers must have condence that their orders will be

timely and that their personal information will be secure.

They have that condence in Amazon.

In much the same way that Walmart sparked the demise

of small mom-and-pop stores on Main Street, Amazon is

threatening the dominance of large chain retailers in terms

of price, convenience and service.

“The only chance stores have is to become much more

special than they are right now,” said Lee Peterson of the

Columbus, Ohio-based WD Partners consulting rm. “The

writing’s on the wall, and it’s time for retailers with stores to

create much more compelling experiences than they have.

Because after all, the soft underbelly of Amazon is: They

don’t have stores!”

But even that might be in play. Amazon already has a

nascent chain of Amazon Lockers in major metropolitan

Amazon1

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areas such as Los Angeles, New York City, Philadelphia,

San Francisco and Seattle, where customers can pick up

their deliveries. Some of those locations are cooperative

ventures with convenience retailers such as 7-Eleven andCircle K.

Though many pure-play e-retailers have opened “cement”

stores, Amazon has demurred. However, the company now

says it will open what it is calling “a mini-warehouse with

limited inventory” on West 34th Street, a busy Manhattan

retail strip. Amazon insists it is not crossing over into

retailing and even has refused to use the word “store” for

this venture, but it certainly seems to be a step into the

brick-and-mortar world. How long will it be before the mini-

warehouse puts up some shelves and cabinets in the front

and begins to sell from them?

Probably as soon as Amazon founder Jeff Bezos decides

that it is a good idea, after all, and that he can dominate

retailing as he has dominated e-tailing.

When Bezos announced in 2013 that he was considering

using drones for delivery, most people laughed and wrote

it off as Bezos overreaching yet again. Nobody’s laughing

anymore. What they’re doing instead is guring out if they

can master the delivery drone before he does.

But, as consultant Dixon said, “the real thing is not drones,it’s the essential solution to making everyday things easier

and better for people who don’t have time. Amazon has

found the sweet spot of converging what technology can

do with people’s expectations of what the technology

should be able to do. For Amazon, it’s delivering whatever,

whenever and wherever.”

Bezos wrote, in his 2014 letter to shareholders, “Failure

comes part and parcel with invention. It’s not optional. We

understand that and believe in failing early and iterating

until we get it right. When this process works, it means our

failures are relatively small in size (most experiments can

start small), and when we hit on something that is really

working for customers, we double-down on it with hopes

to turn it into an even bigger success.”

Those sentences could be considered a roadmap for

the journey Bezos and Amazon have taken since the

Wall Street whiz kid gave up his job with a New York

investment-management rm in 1994 and moved into a

garage in Seattle. (It was only for a few months, but the

“started in a garage” legend endures nonetheless.)

In the mid-1990s, the Internet was becoming aninformation and communications highway. Bezos was

convinced it could become a commercial highway, too —

a way to sell merchandise to people who were spending

an increasing amount of their time surng the Web and

interfacing with commercial Web pages constantly. It

wasn’t that nobody had thought of it before, but it was

difcult to control and manage.

Bezos wrote a business plan and called his new venture

Cadabra. But he was talked out of the name because it

sounded too much like “cadaver.” Instead, he chose thename Amazon, the largest channel of water in the world

and also a name that likely would show up at or near the

top of any Internet search. (Another name he toyed with

and rejected was Relentless.com, which might have felt

too close to the personality of the man himself.)

Bezos chose to sell books, mostly because they were

easy to handle, package and ship and also because he

found he could negotiate with book distributors for sizable

discounts, so he in turn could sell the books cheaply to the

public. But from the beginning, he envisioned turning his

experiment into way more than just books. If it all worked,

he said, why couldn’t he sell anything? Everything?

The frequent image of tech startups is young, quirky

people in jeans and T-shirts playing darts and ping

pong and bringing their dogs to work. That was never

Amazon. Bezos insisted that employees spend long hours,

work hard and give up good salaries for the benets of

participating in the unlimited future of the young venture.

He ran a spartan operation. Employees were rewarded if

they could come up with new ways to reduce costs and

eliminate waste.

In the book “The Everything Store: Jeff Bezos and the Age

of Amazon,” author Brad Stone tells of Bezos coming upon

a new television set mounted on a wall in the conference

room and exploding in rage (apparently a frequent Bezos

behavioral mode). He couldn’t see the value of something

so wasteful. He ordered it removed, but kept the brackets

in the wall as a reminder to his workers about why they had

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been hired and what they were, and weren’t, there for.

He told everyone, from his initial group of investors in

1997 to the Wall Street community at large, that he likely

wouldn’t turn a prot for ve years. In fact, even in 2014,17 years later, analysts expect Amazon to lose hundreds

of millions despite those nearly $90 billion in sales. Why?

Marketing and technology expenses have risen more than

40 percent a year. Total operating expenses were up more

than 35 percent in 2014. Add in interest expenses and

the company lost more than $450 million in the rst nine

months of 2014.

“For Amazon, it’s not about prots, it’s about

market share — all of it!” consultant Peterson

said. “The only reason investors remain highon Amazon is because they’re betting on

e-commerce to completely supplant brick

endeavors.”

Part of the explanation for the heavy

expenses is that Bezos keeps

experimenting with his formula,

tweaking and trying to improve or

expand. He has thrown many ideas

against the wall over the years,

and many of them have failed

spectacularly. But he keeps testing,

experimenting and innovating.

“I’ve made billions of dollars of

failures at Amazon.com,” he said

in a recent interview with Business

Insider. “None of those things are fun, but

they also don’t matter. Companies that don’t continue to

experiment and don’t embrace failure, they eventually get

in the desperate position where the only thing they can

do is make a Hail Mary bet at the end of their corporate

existence. Whereas companies that are making bets allalong, even big bets — but not ‘bet-the-company’ bets, I

don’t believe in ‘bet-the-company’ bets. That’s when you’re

desperate. That’s the last thing you can do.”

That is not so much different from what Bezos was saying

in 1997, in his rst letter to shareholders: “We will make

bold rather than timid investment decisions where we

see a sufcient probability of gaining market leadership

advantages. Some of these investments will pay off, others

will not, and we will have learned another valuable lesson in

either case.”

The one inviolable rule he had, though, for himself and for

his employees, was that if the consumer wasn’t completelysatised with the experience, the experiment would never

work. Everything he developed, from the pricing and

delivery policies to the user-friendliness of the Amazon site

had the consumer mentality in mind.

That is why he worked so hard — and eventually

succeeded — in eliminating late deliveries, damaged

merchandise, wrong merchandise, incorrect addresses

and billing glitches that would make people think

twice about placing an order on a website.

Though the Amazon strategy isn’t based only

on price, it certainly has been a key element in

getting early adopters to take a chance on an

online supplier. Even today, Amazon drives

retail competitors crazy by changing and

dropping prices over and over during a

single day. The practice robs slower-moving

stores of the chance to promise the lowest

possible prices, since “showroomers”

are scouring stores like Best Buy with

their mobile devices in hand, comparing

online prices to what the retailer has

marked on its shelf.

Internet Retailer Magazine reported that

in mid-2013 Amazon changed prices

on about 40 million products several

times during a single day. On Cyber Monday

2013, Amazon had 3,300 price changes — in one day —

in competitive, low-margin merchandise categories such

as electronics, toys and housewares. (By comparison,

Walmart had 977 price changes, Best Buy just 374.)

And, of course, it’s much easier to make on-the-y priceadjustments on the Internet than in the store.

On Black Friday 2014 (which Amazon actually began the

week before Thanksgiving), Amazon started out the holida

season with deals such as a 50-inch Toshiba TV for $199,

an LG G3 Android smartphone for a penny with a two-year

contract, a Panasonic 3-D Blu-ray player for $35 and a

Roku LT HD Wireless Media Player for $28. And the deals

weren’t of the bait-and-switch, “limited supply” variety.

OVERALL WINNER


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according to the travel website Skift.com.

In 2006, Amazon moved into the tech support business

with Amazon Web Services (AWS), a cloud-computing

product for starting up or running an existing enterprise.

Though Amazon is by far the biggest online retailer in

America, it also is growing faster than the 17 percent pace

of e-commerce as a whole. It is the top online seller in

Europe and Japan, too, and is looking into China’s vast

market, where it will run up against the formidable Alibaba.

com, China’s version of Amazon.

It’s almost becoming anachronistic to call Amazon ane-tailer anymore. In 2013 it was the world’s ninth-biggest

retailer, according to total sales. Kantar Retail, a research

group, predicts that Amazon will be No. 2 by 2018, behind

only Walmart.

But as long as Bezos is involved, it’s presumed that the

laser beam focused intensely on the customer experience

won’t become lost in the growth. Walmart is the driver,

and not just because it’s standing in Amazon’s way. From

the beginning, Bezos emulated Walmart founder Sam

Walton, who famously said, “There is only one boss. The

customer. And he can re everybody in the company from

the chairman on down, simply by spending his money

somewhere else.”

OVERALL WINNER


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BEST CUSTOMER SERVICE


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For Target, 2013 was the biggest single-year expansion

in its history. The company began operations in Canada,

with 127 stores picked up in its acquisition of the Zellers

discount chain, and opened 19 new stores in the United

States.

However, everything wasn’t all sunshine and roses, with

a December 2013 data breach resulting in the release of

millions of customers’ credit-card information. In addition,

Target’s entry into Canada was plagued by supply-

chain problems that left many stores understocked andprices perceived to be out of whack with the company’s

reputation as a discount retailer.

Since then, the company has embarked on a number of

strategies to win back customer condence, including an

increased focus on customer service and building on the

tagline “reaching guests in new ways.”

One of those efforts appears to be an absolute boon to

anyone who has spent time roaming a department store

in a fruitless search for a hard-to-categorize item. The

company’s smartphone app allows shoppers to make a

shopping list, with the app notifying the customer if the

product is available at the chosen store location and, if so,

in what aisle it can be found. On Black Friday, the app led

determined shoppers to the location of doorbuster items.

In another effort to keep up with an ever-changing retail

environment, Target is going after urban customers via

smaller TargetExpress locations. At about 19,000 square

feet, TargetExpress locations are approximately 14 percent

of the size of a typical Target location. Offerings at the

smaller locations are designed to be locally relevant, witha mix of grocery and pharmacy items alongside a limited

selection of basic clothing.

Target’s efforts appear to be paying dividends, with

comparable-store sales in the 2014 third quarter up 1.2

percent. Although small, the gain was more than twice that

booked by Target’s largest competitor for the same period.

Overall net sales for the quarter were up 2.7 percent to

$17.7 billion, with net earnings up 3.1 percent to $352

million.

The company saw particular success with its digital

outreach, with a 30 percent increase in online sales for

the quarter, along with a 50 percent increase in mobile

sales. New CEO Brian Cornell said during a conferencecall with investors that Target’s digital sales are growing

much faster than those of its competitors and continue to

accelerate, with expectations of even faster growth in the

fourth quarter of 2014.

And Target ofcials pulled out the stops to keep the

momentum going through the holiday season: The

company kicked off Black Friday with sales that included

a 40-inch atscreen TV for $119 and a one-day 10 percent

discount on its own gift cards. It also offered free shipping

on orders placed by December 20.

Early reports indicated Target was making the right moves

for the holiday season. The company said Thanksgiving

was its best online shopping day ever, with digital sales up

40 percent over the previous year.

The news from north of the border wasn’t as rosy, though.

Although Target was seeing its Canadian sales rise as it

addressed its early stumbles, in January the company

accepted the fact that there was no way its Canadian

operations would turn a prot in a reasonable amount

of time. Rather than le for bankruptcy, the company

shuttered all 133 of its Canadian stores. The move put

17,000 employees out of work.

Target2



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Ace Hardware3

Ace Hardware has changed its slogan several times over

the years in an effort to keep up with the times, but it still

carries as much weight as it always did. The most popular

motto was probably “Ace is the place with the helpful

hardware man,” although the “hardware man” part has

been deemphasized to eventually become “Ace … the

helpful place.”

Still, the sentiment remains: Need to ask about a home-

improvement project? Someone at Ace likely will have theanswers.

Customer-experience expert Shep Hyken alluded to Ace

Hardware’s business philosophy in a recent blog post on

RetailCustomerExperience.com.

“Stop worrying so much about the sale, and just take care

of the customer,” Hyken said. “Whether the customer is

buying right now or not, if you deliver the best service you

can, eventually the sale will come.”

Looking back, Ace Hardware was founded in 1924 by a

group of hardware store owners, incorporating in 1927 as

Ace Stores. The goal of the original company was to serve

as a central purchasing organization for member stores.

The founders chose the name “Ace” in a nod to World War

I ghter pilots. The company was sold to its retailers in

1973 and now operates as a cooperative rather than as a

franchise.

Today, more than 4,850 locally owned and operated

Ace Stores are around the world, and the company is

recognized routinely for its outstanding customer service.

Those efforts are paying off on the bottom line as well. In

2013, the company recorded a 4.3 percent same-store

retail sales growth, with 75 percent of Ace store owners

reporting record net income. It surpassed $4.2 billion in

revenue for the rst time in its 90-year history.

In January 2013, Ace launched a long-term growth strategy

dubbed 20/20 Vision, designed to strengthen the Ace brandand help retailers improve their stores’ performance. One

of the key components of the strategy is Helpful 101 — a

training and certication program for retailers and their

associates. The certication isn’t based only on employees

taking a test from the corporate ofce; it also includes the

results of customer surveys.

An additional piece of the strategy is a new brand dubbed

The Supply Place, an effort to build business-to-business

sales by establishing relationships with local schools,

churches, restaurants and other local operations.

Looking ahead, growth initiatives under consideration

include an increased focus on smaller locations of about

5,000 square feet or less. The smaller stores, which include

customized merchandising displays and stock more

than 11,000 of the retailer’s most popular and protable

hardware products, allow Ace to grow in markets that aren’t

able to accommodate additional full-size retail locations.

In addition, some operators have achieved success by

locating Ace Hardware stores next to grocery stores they

own. The higher-prot hardware stores allow the operator

to price grocery items more aggressively, resulting in

increased sales for both operations.



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Costco4

Although its main competitor may have more locations,

Costco is the top warehouse club in the world by revenue.

The company booked $112.6 billion in revenue for scal

2014, a 7 percent increase over the previous year, and

operates more than 655 locations in the United States as

well as South America, Europe, Asia and Australia.

Costco operates under a simple philosophy: Keep costs

down and pass the savings on to its members. While most

big-box retailers operate under a similar mantra, Costco

banks on its customer service to keep it at the head of thepack.

Much of the company’s relationship with its customers

is supported by a “shop condently” policy that includes

returning a customer’s membership fee in full if he or

she is dissatised at any time. In addition, the company

guarantees satisfaction on every product or it will refund

the purchase price in full.

Costco’s roots go back to 1976 when Price Club opened in

a converted San Diego airplane hangar, originally to serve

small businesses. The company eventually changed itspolicy and began serving nonbusiness customers as well.

A former Price Club executive founded Costco in Seattle

in 1983, and the two companies merged in 1993 under the

name PriceCostco, reverting back to the Costco name in

1997.

Although in recent years many businesses have reacted

to a stagnant economy by cutting both staff and wages,

Costco has taken the opposite approach. Pay for new

employees averages $11.50 per hour, rising to $19.50

after ve years. In addition, long-term employees receive

a bonus of $2,000 or more every six months. Employee

benets include health, vision, dental, life and disability

insurance, with the company picking up most of the tab,

as well as a stock-purchase program and access to a

network of free counseling services.

CEO Craig Jelinak shocked many in the industry in 2013

when he expressed support for a national minimum-wage

hike. Instead of trying to keep wages low, he said, it’s more

protable in the long term to minimize employee turnover

and maximize employee productivity, commitment and

loyalty. With Costco’s turnover running about 20 percent,dropping to less than 5 percent for employees who have

been with the company for more than a year, it seems like

good advice.

While the higher pay and generous benets help keep

turnover low, they also allow Costco to attract a better

educated, higher skilled, happier workforce. Happy

employees are more productive employees, the company

believes, and are more willing to go the extra mile to satisfy

customers.

Those policies are delivering concrete benets. Costco’smembership-renewal rate is generally above 85 percent,

and its earnings continue to grow. In the rst quarter of

the company’s scal 2015, net income was up 17 percent

year-over-year to $496 million. Same-store sales were up 7

percent for the same period.



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Trader Joe’s5

The opening of a new Trader Joe’s location often is

preceded by news stories in which people relate tales of

driving for hours to shop at a store in another city to pick

up items such as Cookie Butter, Triple Ginger Snaps or

Reduced Guilt Chunky Guacamole. In addition, those tales

inevitably hit on the laid-back atmosphere of the store and

vast array of private-label products.

The most talked-about aspect of shopping at Trader Joe’s,

though, is the customer service.

When founder Joe Coulombe was seeking to rebrand his

Los Angeles area chain of Pronto Markets convenience

stores to distinguish them from competitor 7-Eleven, the

story goes, he took inspiration from a trip to the Caribbean.

Tiki culture was still a fad, and Polynesian-themed

restaurant Trader Vic’s was at the height of its popularity. In

addition, many Americans were traveling out of the country

and experiencing food and wine that were not available in

the United States.

From those experiences came the rst Trader Joe’s,

which opened in 1967. Since then, the store has expandedto include more than 410 locations in 38 states and

Washington, D.C. German supermarket chain Aldi Nord

bought the company in 1979. Sister company Aldi Sud

operates the Aldi brand of discount supermarkets. Aldi

Nord has left the majority of Coulombe’s original strategies

in place.

In keeping with the Caribbean theme, Trader Joe’s

stores feature cedar-plank walls, hand-painted signs

and tasting stations designed to look like beach huts.

Employees wear Hawaiian shirts and use nautical terms,

with store managers known as captains and assistant

managers dubbed rst mates.

Ask a Trader Joe’s employee to help nd a product and he

or she will walk with you to the aisle, answer any questions

you may have and even join you in a taste test. The

company has a “no-questions asked” return policy, even

if the product has been opened and the purchaser simply

didn’t like it.

Of course, there are plenty of good reasons for the

enthusiasm of the Trader Joe’s crew. In keeping with

Coulombe’s goal of paying his employees well, crew

members often make twice as much as what they would

earn at a competitor. The company offered health insurance

to part-timers until 2013; it took some heat for dropping the

benet but offered a detailed breakdown of how many of itsemployees would end up spending less buying insurance

through the health-care exchanges created under the

Affordable Care Act and taking advantage of federal

subsidies.

Trader Joe’s was so concerned about creating a personal

relationship with its customers that it resisted installing

checkout scanners for many years over worries that the

“ping” of the scanner would interrupt the conversation

between the cashier and the customer. Although it

eventually relented after making sure the scanners wouldn’t

be a problem, it still has eschewed the “cleanup on aisle 5”

PA systems standard in most other supermarkets. Instead,

in keeping with its nautical theme, bells at each checkout

station serve as an island-style Morse code that alerts the

crew to issues that need to be addressed, from opening up

another register to answering a customer’s question.



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Kohl’s Lowe’s6 7

Kohl’s stepped up its service game in 2014 with the hiring

of a new customer-relations executive and the launch of its

Yes2You Rewards customer-loyalty program.

In this new omnichannel pilot program, members receive

one reward point for every dollar they spend, plus

a $5 reward for every 100 points earned, with no limit on

points. In addition, members will receive eight savings

offers per year plus a birthday gift and will be notied of

exclusive opportunities to earn bonus points for even more

rewards.

The rewards points can be shared with other program

enrollees or donated to Kohl’s Cares, a nationwide initiative

in support of children’s health and education.

In conjunction with the rewards program, Kohl’s expanded

its mobile wallet for members to track, redeem and share

points.

By requiring that the rewards be used within 30 days, Kohl’s

is ensuring repeat store visits. During testing, Kohl’s found

that the loyalty members usually made two extra annual

trips to its stores.

“Kohl’s is attempting to build on the personal connections

we try to make with the millions of our customers every

day,” said Michelle Gass, Kohl’s chief customer ofcer. “We

have been testing variations of the program for two years

and have enrolled more than 10 million members in the pilot

phase alone.”

As the housing

market rebounds,

the two big home-

supply retailers

are positioning

themselves for

market leadership

Lowe’s is hoping to overtake sector leader Home Depot

with improved in-store service, largely through the

development of OSHbot, a robotic shopping assistant thatwill answer customers’ questions in-store and guide them

to the right products.

The 5-foot-tall white robot was introduced in 2013 in San

Jose, California at an Orchard Supply Hardware store, part

of the chain Lowe’s acquired in 2013. The robot houses two

large rectangular screens, front and back, and speaks both

English and Spanish.

Customers who need help with, say, a specic type

of plumbing project can initiate a video conference on

OSHbot’s front screen with available experts at anyOrchard store.

To navigate, OSHbot uses lasers to sense its surroundings,

the same light detection and ranging system (also called

“Lidar”) used by Google’s self-driving cars. As it leads

customers through the store, its lasers identify in-store

specials in the various departments and post those on the

screen.

OSHbot also can help customers match a certain-size nail

or hinge by using a 3-D scanner and determine immediately

if the part is in stock. In the future, said Fellow Robots CEOMarco Mascorro, OSHbot may be able to create the part

with a 3-D printer.

“OSHbot is a way to bring more shopping convenience

and some of the benets of e-commerce into the physical

store,” said Kyle Nel, executive director of Lowe’s

Innovation Labs.



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Nordstrom Best Buy8 9

The one thing that always has differentiated the Nordstrom

brand and fueled its growth has been customer service:

that smiling, patient sales associate across the counter who

would listen to complaints, address issues and go out of

her way to help a customer solve a shopping problem.

No problem was insurmountable. No request was

unreasonable. No item couldn’t be found in some

Nordstrom store and shipped to the shopper’s convenient

location. It’s why consumers ocked to Nordstrom stores.

But in the age of technology, Nordstrom has found other

ways of delivering that service component.

In 2014, in Nordstrom stores in Seattle and San Jose,

California the retailer has experimented with a smart mirror

in its tting rooms. The interactive, full-length dressing

mirror contains technology that allows the customer to see

what her outt looks like in different styles, colors and sizes

without having to return to the store racks.

If a different size or color is needed, the smart mirror is able

to scan the item’s barcode and make sure the new request

is in stock and to instruct a store associate to bring the item

to the dressing room.

“The way customers shop for clothes has evolved,” said

Jamie Nordstrom, head of stores for his family’s company.

“So how do we take all the information that’s available to

customers while they’re browsing the Web at home and

bring that into the store? It’s the best of both worlds.”

When Best Buy was

establishing itself

as the retail leader

in the consumer

electronics

segment beginning

in the 1990s, it did

so by constantly

adapting its store

environments to

industry, product and consumer changes.

As products became more high tech and confusing, the

retailer stepped up its stafng and training, empowering

staffers to take more time with shoppers, to explain product

specications and capabilities. Its Geek Squad initiative,

which it acquired and made part of the Best Buy offering

in 2002, extended the service component from the store all

the way into customers’ homes.

But that strategy has proven less effective as consumers

have become more willing to buy online or at deep

discounters such as Walmart, where low prices seemed

more important than personal consultation and service.

When Hubert Joly took over as CEO in 2012, he discovered

that while Best Buy stores had 600 million annual visits,

only 40 percent produced purchases.

“Our goal,” he said, “is to offer a very compelling set of

customer promises with the assortment, the advice, the

convenience and the service. It’s simply to eliminate price

as an obstacle to buying.”

So Best Buy is stepping up its in-store service component,increasing employee training and encouraging associates

to help shoppers nd and order online items they can’t

nd in the stores. The company also is introducing a

team-based incentive program tied to measures such as

customer service and sales. And Best Buy has given its

employees authority to price match against select online

competition, including Amazon.



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As the only pure-play home goods retailer since the

bankruptcy declaration of rival Linens ’n Things in 2008,

Bed Bath & Beyond has been able to hold off the incursion

of the e-tail revolution for a while. But not for very long,

apparently. A survey recently conducted by Placed, a

Seattle software company, said that Bed Bath & Beyond

faced the greatest risks from “showrooming” among nearly

15,000 Amazon customers.

In response, the New Jersey-based retailer founded in

1971 as Bed ’n Bath has been aggressively pursuing anomnichannel strategy by strengthening its online presence.

And it has raised the service level in its more than 1,000

physical stores.

The company’s in-store strategy is based on the wide

variety of products it carries on the shelves, more than can

be found in other stores or websites. Also, the retailer’s

decentralized management culture enables it to localize

customer needs by offering products in accordance with

regional tastes.

Bed Bath & Beyond’s online business contributes onlyabout 2 percent to its overall revenues. But the company is

planning to enhance network communication in its stores

and upgrade mobile websites and apps. The retailer also

is working toward improving its point-of-sale system. Most

important, the company is building a $36 million Bed Bath

& Beyond IT data center in North Carolina that will update

and expand both its online and in-store operations.

Home-improvement retailer The Home Depot launched

a revamped retail strategy in late 2013 as part of its

effort to fend off competitors such as Lowe’s and Ace

Hardware. The company put increased emphasis on its

customer-service efforts and has been working to boost

its e-commerce business, rolling out same-day delivery

in several markets. Former CEO Frank Blake, who retired

in November 2014, often was quoted as saying he was

the least important employee at the company because he

didn’t work with customers

every day. Efforts to improve

customer service appear to be

paying off; in the company’s

own customer surveys,

the percentage who would

strongly recommend The

Home Depot to others has

increased 44 percent over the

last seven years.

Although Walmart, as the world’s leading retailer, takes

its share of arrows, there are reasons the company has

attained the position it has. Of course, its stores carry most

of what a shopper may need at good prices, but that’s not

the only reason. Walmart has one of the most liberal return

policies in the industry, and it matches prices with both

brick-and-mortar and online retailers. The online price-matching policy was so liberal, in fact, that the company

found it necessary to revise it slightly to combat fraud.

Walmart took steps during the 2014 holiday shopping

season to address complaints of long lines at the checkout

by deploying additional cashiers during peak periods.

Bed Bath & Beyond The Home Depot

Walmart

10 11

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Employees at the Apple Store are hired as much

for their personality as they are for their computer

knowledge. The company looks for workers who want

to help others achieve their dreams, even if that means

occasionally steering customers to a less expensive

but more appropriate purchase. The Apple Store app

allows customers to set up appointments via their digital

devices and have a salesperson available and prepared

when they arrive. If a handoff to

another employee is needed, the

rst employee is able to discreetly

pass along personal information,

eliminating the need for customers

to reintroduce themselves and

deepening the relationship between

the customer and the employees.

Kroger, the nation’s No. 2 retailer, has faced increasing

competition over the years from nontraditional competitors

who have added groceries as a way to lure in additional

customers. To maintain its position near the top of the

retail rankings, Kroger developed a customer-rst strategy,

offering lower — not the lowest — prices as well as a wider

variety of products and improved customer service to

create an overall better shopping experience. The company

is heavily invested in technology that helps it improve the

customer experience,

with the latest tool being a

series of infrared cameras

that tracks customer

movement and alerts

managers when more

cashiers are needed.

Although L.L. Bean does the bulk of its sales online, the

clothing and outdoor equipment retailers doesn’t stray

far from its Maine roots. When a customer dials in to one

of its call centers, the person they speak with is in Maine,

delivering service based on Yankee ingenuity and the

unique character of the region, not to mention the patience

and cheerfulness that stems from dealing with the harsh

winters that hit the state every year. L.L. Bean strives to

answer every call within 20 seconds, pulling people from

other departments

to man the phones if

wait times exceed that

target.

Seattle-based coffee chain Starbucks always has been

known for its friendly baristas and its casual, laid-back

environment. One little-known fact about the company:

Printed on the inside of those green aprons the baristas

wear is the company’s customer-service vision statement,

which reads, “We create inspired moments in each

customer’s day.” Below that are printed the four pillars of

that vision: anticipate, connect, personalize and own. In

late 2014, the company introduced a number of initiatives

designed to beef up its engagement with customers,

including a “Mobile Order & Pay” feature that lets

customers place orders in advance and pick them up when

they are ready. The solution will be available nationally in

2015.

Apple Store/iTunes L.L. Bean

Starbucks

Kroger

13 15

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Macy’s has been upping its game in recent years by testing

new technologies that help it be where its customers are.

The company is developing new omnichannel distribution

strategies that enable customers to order items straight

from the warehouse, same-day delivery and in-store

iBeacon communications. The company is participating

in the Apple Pay mobile-payment solution and even has

developed an app that lets a customer submit a photo of an

item and matches it with a similar

one from Macy’s. CEO Terry

Lundgren said the company’s

goal remains to help its customers

shop whenever, wherever and

however they prefer, and to be

able to use the company’s entire

inventory to satisfy their demands.

Not only is Lakeland, Florida-based Publix the largest

employee-owned company in America, it’s estimated to

be the most protable as well. The 1,090-store company

places the credit for both of those honors on its “customer

rst” policy and the fact that as owners its employees

have a vested interest in seeing the company succeed. If a

Publix employee is asked where an item is located, instead

of telling the shopper the aisle number, he or she will either

walk with the shopper to the

item or retrieve it themselves.In addition, the company

strives for a two-person-per-

line maximum at its checkout

registers.

Although Wegmans Food Markets, with just 85 stores

primarily in the Northeast, is dwarfed by many of its

competitors, the privately held company consistently

lands on “best grocery store” lists as well as those

recognizing the best places to work. Wegmans dropped

tobacco products from its offerings in 2008, years before

other retailers hopped on the trend and offered smoking-

cessation programs to its employees. The company also

regularly ends up at the top of lists recognizing outstanding

customer service, an honor

the company attributes to

the fact that it empowers

its employees to make

decisions that benet

its customers and the

company.

Several pharmacy chains are seeking to offer convenience

and create brand loyalty with their customers through in-

store clinics, and Walgreens is taking things a step further

by making those services available via smartphone. The

8,200-store company is testing a new telemedicine service

in California and Michigan that lets customers contact a

physician around the clock. Instead of spending hours in

an emergency room or weeks waiting for an appointment,

customers can have a $49

virtual visit with a physicianfor problems that aren’t

emergencies at a time that’s

convenient for them. The

doctors are licensed in the

patient’s state and even can

call in prescriptions.

Macy’s Wegmans

WalgreensPublix

17 19

2018



19/6119


Tough times in the bookselling industry have left Barnes

& Noble as the last national bookstore chain, and the

company still is struggling to nd its footing. In December

2014 it parted ways with Microsoft on efforts to ratchet up

development of its Nook e-reader, and the chain plans to

spin off the Nook division by mid-2015. Still, the company

received some good news for the 2014 third quarter when

sales for its traditional bookselling business were up 0.5

percent year-over-year. Some retail experts say that, rather

than try to compete with discount booksellers such as

Amazon, Barnes & Noble should capitalize on the coffee

shops located in many of its stores and go head-to-head

with places such as Starbucks.

Whole Foods long has been recognized for the loyalty of

its customers, despite a perception that its products are

more expensive than at other supermarkets. The company

always has put a premium on customer service, and it is

testing a number of services designed to step up its game

even more. Whole Foods is testing a delivery service that

enables customers to have their groceries delivered in

as little as one hour, as well as an option to place orders

online and pick up those orders at a local store. In addition,

the company is seeking to expand beyond its traditional

locations in upscale neighborhoods, opening in lower-

income areas in Detroit and Chicago.

CVS Health, formerly CVS Caremark, rocked the pharmacy

world in 2014 when it announced that it would stop selling

tobacco products. The move was part of a plan to address

rising health-care costs and reposition itself as a provider

of health services as well as prescription drugs and otherproducts. CVS made a number of other changes during

2014 to help customers manage their health care. With

millions of Americans signing up for health insurance under

the Affordable Care Act, the company rolled out Bill Pay at

CVS/pharmacy, in which customers could pay their health-

insurance premiums at CVS stores for no additional cost.

Barnes & Noble

CVS Health

Whole Foods

21

23

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BEST ONLINE EXPERIENCE


22/6122


Clothing and outdoor-equipment retailer L.L.Bean spent

nearly the entire year preparing for Cyber Monday 2014.

Although much of its sales take place online, the

company backstopped that with 2,400 customer-service

representatives working in three call centers. If the call

volume becomes so heavy that it takes more than 20

seconds to answer a call, the company pulls people from

other departments and outts them with headsets.

Rather than drawing customers to its online-orderingportal with a few deeply discounted items, Bean offered an

across-the-board 10 percent discount on its entire product

line. The company expected to have more than a million

visitors to its website on Cyber Monday and to take in

more than 100,000 orders by the end of the day.

The Cyber Monday excitement is light years away from

where the company began at the beginning of the

1900s. Outdoorsman Leon Leonwood Bean founded his

namesake company in 1912 selling just one product, the

Maine Hunting Shoe. Bean had designed a waterproof

boot for hunters and sent a mail-order ier to holders of

nonresident Maine hunting licenses. He opened his rst

retail store in Freeport, Maine, in 1917.

L.L.Bean’s 200,000 square-foot agship store stands on

the site of that original store and is open 24 hours a day,

365 days a year. There haven’t been locks on the doors

since 1951, and the store draws about 3 million visitors

each year. The company operates more than 100 stores

in the United States and internationally and sends its

catalogs to customers in 170 countries. Sales in 2013

topped $1.56 billion.

The company was an early entrant into online retailing,

launching its website in 1995. Internet orders surpassed

catalog orders for the rst time in 2009, and its online

business continues to grow. L.L.Bean launched its rst

mobile e-commerce site in 2011.

The company has been integrating social media with

its online presence for the last several years. In 2010,

L.L.Bean added a “Share Your Story” feature to its website

and Facebook page, encouraging customers to share their

L.L.Bean experiences with text, images and video. As part

of its 100th anniversary celebration, the company held a

“Million Moment Mission” campaign, asking customers

to share outdoor moments on its various social-media

channels. L.L.Bean donated $1 to the National Park

Foundation for each moment shared, with more than $1

million in proceeds aiding programs that encourage young

people to enjoy the outdoors.

Although L.L.Bean has come a long way in its more-than-

100-year history, the centerpiece of its offerings continues

to be the handmade boots modeled after that original

Maine Hunting Shoe. A younger, more hip crowd has

joined the outdoorsmen who were the boots’ mainstay

customers.

Demand for the iconic boot has grown so much, in fact,

that L.L.Bean is struggling to keep up with demand. It

expected to sell more than 450,000 pairs of boots in

2014 and is hiring dozens of new workers, bringing its

bootmaking staff to more than 500. The company expects

those numbers to continue to grow, with boot sales

projected to top 500,000 pairs in 2015.

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After years of serving as a showroom for online-only

retailers, at the beginning of 2014 Best Buy decided it had

had enough. Although it still considers its physical stores

an important part of its strategy, the company now sees

itself as an “online rst” retailer.

Along with in-store improvements made through a cost-

control initiative dubbed Renew Blue, the company plans

to spend the next two years beeng up its online game.

“The front door of our shopping experience is online,”Best Buy CEO Hubert Joly said during a February 2014

conference call with investors. “Customers start their

shopping experience online. That’s why our strategic

investments in the online shopping experience are

fundamental.”

While the company saw a modest 2.2 percent increase in

domestic same-store sales for its scal 2014 third quarter

ended September 30, its online business was up 22

percent over the same period.

Among the site improvements in 2014 are richer visual andeditorial content for the home theater, mobile, appliance

and gaming categories; expanded “wish list” capabilities;

an expanded holiday gift center; and an improved

checkout process that provides faster and precise delivery

dates. In addition, the site now includes a Best Buy Outlet

section where online consumers can see more display

models and similar open-box inventory that are available

for purchase.

The company also is leveraging a “big data” effort dubbed

Athena that will mine customer data to provide more

personalized digital marketing, leveraging information

including browsing history, location and demographics.

“With Athena in place, over time we will be able to shift

more of our marketing efforts to targeted e-mail messages

and offers,” Joly said. “[We will] implement programs

for key buying occasions like gifting, life events and

registry and new movers, in addition to creating greater

engagement with customers for our loyalty program and

our credit-card offering.”

Best Buy also has increased its “ship-from-store” optionto more than 1,400 U.S. stores from just 400 in 2013.

If a product isn’t available from a fulllment center, the

company will ship it from a store instead. Shoppers also

have the option of buying a product online and picking it

up at a store.

Although Best Buy doesn’t break out trafc or sales data

for Thanksgiving and Black Friday, e-commerce rm

ChannelAdvisor estimated that the company’s online sales

for Thanksgiving were up 16.3 percent compared with the

previous year.

The company experienced a stumble, though, after its

website went ofine several times during the holiday

weekend.

“BestBuy.com has experienced record levels of website

trafc,” the company said in a Nov. 26 statement. “This has

affected site performance and we have temporarily taken

the site down in response. We are taking measures to

restore full performance of the site as quickly as possible.”

Analysts attributed the issues to the growing popularity of

the online portal and suggested that sales would be onlyminimally affected, as many shoppers were using the site

to compare prices and would make their purchases

in-store.

Best Buy3



24/6124


Walmart undertook a major overhaul to its online-shopping

portal Walmart.com in 2014 to make the site more user-

friendly. The company shut down the site for most of

October; while many retail analysts were scratching their

heads at the decision to take the site completely ofine,

most agreed the changes were a necessary improvement.

The upgrades are in recognition of not only the growing

dominance of e-commerce, but also the fact that, with

many Americans living just a few miles from a Walmart

location, the company can leverage its existing distributionnetwork to have those stores serve as pickup points for

online purchases. Walmart.com now includes more than 5

million SKUs, more than double the amount offered on the

site in 2013.

Among the changes incorporated in the upgrade were a

simplied appearance designed to work well on devices

ranging from small tablets to large desktop displays. The

company also looked at ways to incorporate input from a

variety of mechanisms, including touch.

Behind the curtain, Walmart incorporated much more

personalization than the previous iteration did, increasing

the quality and frequency of product recommendations

based on past searches or purchases as well as add-ons

to current purchases. The company also overhauled the

checkout ow to reduce the number of clicks from product

selection to checkout.

Walmart is betting that its online investment will help make

up for stagnant brick-and-mortar sales, and it looks as if

the bet is paying off. The company said Cyber Monday

2014 was the biggest day in its history for online orders.

In a shift away from the traditional customer campouts

in anticipation of deals, Walmart has dubbed the period

between Thanksgiving and Cyber Monday as the “New

Black Friday,” with a variety of deals spread over the ve-

day stretch. Walmart.com received 1.5 billion page views

during the period, with 70 percent of the trafc coming

from mobile devices.

The company also gave a nod to those working over

the holiday with a Cyber Monday “Evening Edition” after

nding that 1 in 5 of its customers didn’t plan to shop until

Monday evening, in part because work schedules got in

the way. The “Evening Edition” helped drive a 50 percent

increase in mobile trafc compared with 2013.

For the rst time, shoppers were given the option of

in-store, same-day pickup after making their onlinepurchases. The move meant the company likely could gain

additional sales from customers who came in to pick up an

item ordered online and made an additional purchase while

in the store. It was Walmart’s biggest day ever for same-

day pickup, the company said, with orders increasing 70

percent over last year.

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Nordstrom’s online sales grew a remarkable 22 percent

during the third quarter of 2014. The specialty department

store chain has become known as a leader in the new

technology for retailing.

In 2014, Nordstrom launched the much-anticipated

Nordstrom Rack e-commerce site, nordstromrack.com,

sharing a platform with HauteLook, a ash-sale business

Nordstrom acquired three years prior. Shoppers can

access Nordstrom Rack off-price merchandise alongside

HauteLook’s sale events through a single login, shopping

cart and checkout.

The site contains all the service components Nordstrom

always has been known for: easy returns, free shipping

and enrollment in the Nordstrom Rewards program.

Also in 2014, Nordstrom acquired Trunk Club, an online

men’s apparel site that includes personalized services

for customers on a subscription basis. Stylists interview

shoppers online, discern tastes and measurements and

send shoppers trunks of items they can keep and pay for

or mail back within 10 days.

The omnichannel effort is paying off, especially among

the technology-savvy younger generation that never was

considered Nordstrom’s strong suit. In November 2014,

according to the social-media analysis rm Shareablee

Inc., Nordstrom was the No. 1 social-media retail brand

in the country, with a 46.2 percent increase in Facebook

activity and 885,000 engaged actions, such as “likes,”

“comments,” “shares,” “retweets,” and “favorites” across

its social-media channels.

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Costco8


While Costco has been a traditional membership

warehouse club since its origination in 1983 in Seattle, its

rapid success has not been based solely on bulk orders at

low prices. Rather, the guiding principle from the beginning

was offering shoppers a treasure hunt of unexpected items

that the retailer regularly rotated. There always would be a

new nd with every shopping trip.

But even though its in-store experience has fueled its

growth over 30 years, the brand is smart enough to know

that today’s shoppers buy an increasing amount on theInternet.

Costco generated a total of $3 billion in e-commerce

revenues in scal 2014, which represents less than 3

percent of net sales. But it’s been a strong and steady

growth, up 19 percent for the year.

Costco has replatformed its website, making it easier

to use and to shop, and concentrated on new product

categories. Whereas once it saw the Web as being ideal

for large items, such as TVs and furniture that can’t be

loaded easily in the family’s van, it has added health-and-beauty sundries and some apparel — branded items that

don’t have to be touched to be purchased.

And the company is testing Google Express in some

markets, which provides consumers a platform for

shopping online locally and getting same-day delivery.

Newegg.com, the consumer electronics Internet site

founded in China in 2001, is now the leading electronics-

focused e-retailer in the United States. Its site offers more

than 25 million registered users a comprehensive selection of

the latest consumer electronics products, detailed product

descriptions and images, how-to information and customer

reviews. It also offers an online tech community, giving

customers the opportunity to interact with other computer,

gaming and consumer electronics enthusiasts.

The Newegg site carries cell phones, computers and tablets,ofce supplies, TVs and gaming supplies, plus software,

automotive tech and even the occasional health and beauty,

personal care, sports equipment and apparel items.

Newegg regularly earns industry-leading customer-

service ratings in categories such as “Response Time and

Consistency” and “Merchandise Availability.”

In 2014, during the heavy-volume holiday shipping season,

Newegg was the rst company to use the DirectPost shipping

service made available by OnTrac, the guaranteed, small-

package, low-cost delivery service.

“The new DirectPost mail product helps us provide ourcustomers with the perfect marriage between inexpensive

postal rates and faster shipping,” said Kunal Thakkar,

senior vice president of global operations for Newegg North

America.

According to PC Magazine, Newegg gave Amazon a run

for its money over the robust 2014 Black Friday/Cyber

Monday holiday shopping weekend, with a selection of

processors, laptops, tablets and hard drives that were as

much as 50 percent off.


Newegg9


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In the last few years, The Home Depot has made major

investments in its online channels. In its third quarter

ending Nov. 2, 2014, during which the brand improved its

website’s navigation and search capabilities and expanded

chat functionality, online sales rose 40 percent year-on-

year. Currently, the Internet represents 4 percent of The

Home Depot’s total sales.

During 2014, The Home Depot added dedicated storage

bays — where customers can pick up their online orders— in 550 of its stores. Currently, 40 percent of The Home

Depot’s online orders are picked up in its stores.

Barnes & Noble is leveraging its Internet and mobile

channels to grow sales and drive trafc to its nationwide

network of stores. In addition to launching its “Pick Me Up”

service that offers a collection of online purchases at local

stores, the company has partnered with Google to enable

customers to place online orders with Google Express

and receive same-day home delivery from selected stores.

This service effectively turns Barnes & Noble stores

into warehouse delivery hubs, allowing the company to

compete with Amazon on speed of delivery.

Barnes & Noble had the best mobile app in the Electronics

& Entertainment segment in research rm ARC 360’s

November 2014 The State of the U.S. Retail Apps Economy

report.


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Online discount retailer Overstock.com aims to provide

“a level of service customers will never forget, making

them want to come back for more.” To keep its 15 million

monthly visitors shopping, Overstock.com offers more

than 1 million product listings of new and closeout

merchandise, including furniture, apparel, electronics and

jewelry.

Overstock.com’s Club O loyalty scheme members enjoy

free shipping and at least 5 percent in reward dollars on allorders. Nonmembers receive free shipping for U.S. orders

over $50, paying $2.95 in shipping for U.S. orders below

that amount.

Daily deals appear on Overstock.com’s Flash Deals site,

handmade fair-trade items by artisans from around the

world are available on its Worldstock site, and the Auto

Portal offers car listings. Customers can share helpful

“how to” advice and information on Overstock.com’s

O.info site.

J.C. Penney has adopted an integrated omnichannel

approach to online and in-store sales, boosting online

sales with orders placed in-store and fullling online orders

from store merchandise. In its second quarter ending Aug.

2, 2014, online sales grew 16.7 percent year-on-year.

Mike Rodgers, senior vice president of omnichannelstrategy and execution, said J.C. Penney has enhanced

its website’s checkout process and search engine. “We’ve

made it very fast for (online) customers to get to checkout

quickly and be done with the transaction,” he said. “We’ve

also enhanced our search-and-nd capability to allow

customers to get products quicker.”

Overstock.com J.C. Penney13 14



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During 2015, Lowe’s plans to transform its current

multichannel offering to an omnichannel experience.

“Through enhanced customer-service tools, we expect to

improve our associates’ ability to sell seamlessly across

channels and to expand fulllment capabilities beyond

buy-online-pick-up-in-store or parcel fulllment of online

orders,” it said.

Since 2011, Lowe’s has offered MyLowes, a personalizable

online and mobile tool that enables customers to view

their in-store and online purchases in one location on a PC

or mobile device. Using MyLowes, customers can save

inspirational products, how-to information, wishlists and

other content; create home proles for planning future

projects; and set reminders to buy items regularly needed.

Good customer service is foundational for Amazon

subsidiary Zappos, which has diversied from its origins

as an online shoe retailer and now sells more than 1,000

clothing, accessory and shoe brands. “My passion is

customer service and company culture,” Zappos’ CEO

Tony Hsieh told the Austin Business Journal. “Shoes just

happen to be a mechanism for me to realize that. That’s

why Zappos is more focused on customer service. If we

were just an online retailer, I probably wouldn’t still be

there.”

Zappos engages with customers via Facebook, Instagram

and Twitter, with its customer-service team answering

phones, emails, live chats and Twitter inquiries 24/7. It

offers free domestic shipping with no minimum order

sizes and 365-day free returns. Zappos workers have no

designated call-duration times or upselling requirements.

Instead, they aim to create personal emotional connections

with each customer contacting them, Zappos says.

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Sears sees integrated online and in-store sales and

customer service as key to its future protability. Edward

Lampert, Sears Holdings’ chairman and CEO, told

Businessweek that the retailer’s mantra is “integrated

retail.”

In July 2014, Sears and Kmart announced an online/in-

store collaboration to allow pickup of sears.com or kmart.

com orders at any of the two retailers’ stores.

Sears has been investing in Shop Your Way, its onlinemember-loyalty program and social community that offers

products from over 50 retail partners and service providers

as well as from Sears, Kmart and Lands’ End.

Over the last two years, outdoor recreation merchandise

retailer Cabela’s has taken several steps to improve its

customers’ online and mobile experiences. In time for the

2014 holiday season, Cabela’s simplied the checkout

process on its cabelas.com online site, enabling checkout

with two clicks.

In November 2013, Cabela’s upgraded its mobile site to

ensure it offers the same capabilities as its online site.

The upgrades included enabling consumers to add to

their shopping carts, purchase gift cards, locate a store or

click to call to place an order; allowing customers to use

Cabela’s Club Visa credit-card rewards points for payment

at checkout and to access easier shipping and payment

options; and providing quick information regarding product

ratings and reviews.

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Recognizing that customers visit its stores and website for

product and repair information as well as for purchases,

AutoZone has implemented an integrated approach to

its brick-and-mortar, Internet and mobile channels. “We

understand we have to be able to toggle between the

store, the shop, the phone and online in order to meet our

customers’ needs,” said Bill Rhodes, the automotive parts

retailer’s chairman, president and CEO.

Although online sales accounted for just 3.6 percent of

total sales in the fourth quarter ending Aug. 30, 2014,

AutoZone is expanding its online offerings on its autozone.

com and autozonepro.com sites, Rhodes said in an

earnings call. He added that he expects to see AutoZone’s

online business grow at a faster rate than the brick-and-

mortar business for the foreseeable future.

Macy’s has made major investments to improve

customers’ online and mobile experiences during 2014.

Those include new Macy’s and Bloomingdale’s mobile

shopping apps for iOS and Android offering enhanced

navigation allowing customers to easily move between

features, reach desired products with fewer clicks and

check out more quickly.

Macy’s has launched Macy’s Image Search, an iPhone

app enabling customers to search merchandise on macys.

com by submitting a photograph of any merchandise item

they see in daily life. The visual search takes customers

to similar items on macys.com, where they can be

purchased.

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“EBay’s purpose is to build great experiences and make

buyers and sellers happy,” eBay’s incoming CEO Devin

Wenig told the Wall Street Journal. In keeping with this

ethos, a pop-up on eBay’s website asks customers: “How

can we make this page better for you?”

EBay’s mobile apps provide personalized

recommendations, photo uploads and a barcode scanner

for comparing prices. In September 2014, eBay launched

an updated iPhone app allowing sellers to donate to theirfavorite charities when listing items for sale, plus enabling

larger photos, new home-screen notications, a redesigned

cart experience, support for in-store pickup from local

retailers and same-day and scheduled delivery in select

markets. EBay plans a similar upgrade for its Android app.

Sephora has implemented a combined online and in-store

approach to the selling of skin-care, beauty and hair-careproducts. The Sephora to Go app allows customers to

browse products, buy online, view prior purchases, watch

product demos and create a “My Loves” lists for future

purchases and for sharing with friends on social media.

Customers can shop on their mobile devices from those

lists at a local Sephora store, while having a makeover,

consulting with a skin-care expert or receiving personalized

fragrance recommendations. That omnichannel approach

has helped Sephora grow its mobile-shopping channel by

over 150 percent from 2012 to 2013. More than 2 million

customers have downloaded its app.

Staples’ strategy is to let customers shop however and

whenever they want: in-store, online or via mobile. “This

is important for businesses that are always on the go and

can’t wait for a delivery or delay shopping until they are in

front of a desktop,” said Faisal Masud, Staples’ executive

vice president of global e-commerce.

In September 2014, Staples enhanced its online and mobile

channels. Online and mobile customers can check product

availability at the three closest stores to their preferred store

location, pay via the Visa Checkout secure digital-payment

system and collect online orders in-store within two hours.

For products not sold in-store, customers can have orders

shipped to a store for collection.

EBay

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As an omnichannel home-furnishing retailer, Bed Bath &

Beyond enables customers to shop in-store, online or via

mobile devices. They can pick up purchases in-store or

have them shipped from a Bed Bath & Beyond distribution

facility, from a store or direct from a supplier. Items

purchased through any channel can be returned to Bed

Bath & Beyond stores.

Bed Bath & Beyond’s feature-rich website includes blogs,

recipes, housekeeping tips and ideas for entertaining and

giving gifts. The site offers sweeps, instant-win prizes

and shopping tools such as buying guides and video

demonstrations. Products are organized by category and

style — for example, table settings for different types of

dining.

Williams-Sonoma long has specialized in lifestyle

merchandising, using its direct-mail catalogs to show

products in a home setting. That approach has been

carried over to its online eCatalog, which also displays

items in a home setting and allows customers to click

on individual items to open a side panel with further

information.

President and CEO Laura Alber said in a third-quarter

2014 earnings call that Williams-Sonoma has improved

the visibility of customers’ online orders. “We’ve spent

a lot of time on our website’s search capability and on

reorganizing the site so that it’s easily shoppable both on a

desktop and also via mobile,” she said.

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During 2014, Walmart announced several initiatives

designed to reclaim its position as the low-price leader.

“Our strategy is simple,” said Duncan Mac Naughton,

Walmart former U.S. executive vice president and chief

merchandising ofcer. “Lead with low prices, offer the best

brands and make shopping easier than ever.”

“Being the price leader is an ongoing priority for us and a

commitment to customers,” said Doug McMillon, Walmart

Stores Inc.’s president and CEO.

To counter showrooming, where shoppers review products

at local retailers then nd better deals online, in November

2014 Walmart told managers of its 4,300 U.S. stores that

they can match prices with Amazon and other major

online retailers. Greg Foran, Walmart U.S. president and

CEO, said the directive is intended to formalize a practice

already in place in many Walmart stores. “About half of

the stores were doing it anyway,” Reuters quoted Foran as

saying.

Walmart says the price matching has to take place in a

Walmart store, with the customer requesting the price

match at the register.

Price is a major part of Walmart’s strategy for competing

with Amazon. According to an October 2014 study by

Wells Fargo Securities and pricing data supplier 360pi,

Walmart and Target have lower prices than Amazon in four

categories: clothing/shoes, electronics, housewares and

health/beauty. In August 2014, Walmart’s prices dropped

to nearly 10 percent lower than those of Amazon, whose

prices have been increasing, the study says. For their

study, Wells Fargo and 360pi tracked 100,000 products

over 12 months.

Walmart also operates an ad-matching policy that requires

its stores to match any local brick-and-mortar retailers’

advertised prices.

Walmart Stores plans to invest $1.2 billion to $1.5 billion

in e-commerce and digital initiatives in its nancial year

ending Jan. 31, 2016, up from an estimated $1 billion in its

current nancial year and $400 million in scal 2014.

“We’ll change the mix of our capital spend next year to

provide greater access, while continuing to focus on priceleadership, service and a broad assortment,” McMillon

said. “We’ll give customers the choices they want and

need in ways that only Walmart can.”

According to a blog by Jeannie Walters, chief customer

experience investigator and CEO of 360Connext, Walmart

has invested in helping customers blend their digital and

physical experiences in ways few retailers have done. One

example is a robust mobile app allowing iPhone users to

create shopping lists by scanning barcodes while they

shop or by using voice input. “Customers can check price

or product availability, thanks to precise and integrated

inventory data, and even nd the aisle locations of items

on their list,” Walters wrote.

In August 2014, Walmart rolled out Savings Catcher

across the U.S. Savings Catcher is an online and mobile

app that analyzes shoppers’ grocery receipts and

refunds differences between Walmart’s prices and local

competitors’ prices to a Walmart Rewards eGift Card or a

Bluebird by American Express Card.

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Members-only warehouse chain Costco Wholesale

Corp. has attracted a loyal customer base with its deep

discounts on everyday goods, high-quality items, brand-

name products and its treasure-hunt atmosphere. In

the U.S. and Canada, 91 percent of Costco’s members

renewed their subscriptions in its nancial year ending

Aug. 31, 2014. “This was the highest renewal rate in our

history,” Costco’s chief nancial ofcer Richard Galanti

said.

Costco membership, which costs $55 for regular members

and $110 for executive members, has been growing at

around 8 percent a year.

As its customer base largely consists of baby boomers,

Costco is seeking to target millennials with initiatives such

as advertising on the LivingSocial social-media site. In

September 2014, Costco ran an ad on LivingSocial, which

— in return for a regular membership fee of $55 — offered

a $20 cash card, a rotisserie chicken, an apple pie and

several other offers.

“Our strategy is to provide a broad range of high-quality

merchandise and services at prices consistently lower than

our members can obtain elsewhere,” Galanti said.

“Costco … has changed the meaning of low prices to ‘We

work hard all the time to nd you better value,’” customer-

service expert Micah Solomon wrote in a blog.

Costco stipulates that the maximum markup on branded

products is 14 percent and on its signature private-label

products 15 percent. “Our average markup is 10 to 11

percent,” Galanti said. “This compares to supermarkets

with average markups in the low-to-mid 20s and home-

improvement stores with average markups in the 30s.”

Rather than carry large numbers of different brands for

a particular product line, Costco’s strategy is to stock

a limited number of brands in large quantities. Selling

fewer items increases Costco’s sales volume and helps

drive discounts. Costco also changes a quarter of its

merchandise regularly as part of its treasure-hunt strategy,

so customers can expect something different each time

they visit.

“The treasure-hunt strategy offers people a chance for

opportunistic shopping and gets them to keep coming

back to Costco in search of bargains,” Galanti said.

“We seek to limit specic items in each product line to

fast-selling models, sizes, and colors,” Costco says on

its website. Costco carries an average of 3,800 active

stock-keeping units (SKUs) per warehouse, as opposed to

30,000-50,000 SKUs at full-line supermarkets.

“While customers might nd only two different brands

of tinned peaches in a Costco warehouse, they would

typically nd 20 to 40 different varieties in a supermarket,”

Galanti said.

Costco isn’t just a cash-and-carry wholesaler. It also offers

a range of low-cost services to its business and consumer

members, who tend to have well-above-average per capita

incomes. Those include business services such as card

processing via Elavon, payroll services using Intuit and

QuickBooks Online; low-cost car and home insurance; and

the Costco Auto Program, which provides low

Top_100_Consumers Weigh in on the Top Brands in Four Categories

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