Retailers Sustainability Strategies

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Social responsibility departments used to be an addition that companies had in order to comply with governmental regulations and that ultimately worked as a marketing tool to make the company look good. However, that mind-set seems to be part of the past as more and more companies claim that social and environmental sustainability is part of their core businesses, and not just a superficial addition.

This trend is also present in the retailindustry. Big retailers in the United States all have some sort of goals or strategies that in one way or another show their approach to environmental and social sustainability. Many believe that those are still not enough and that especially big companies should be doing more to protect the environment. However, it is true that at least the issue is now more public than ever before and that companies are feeling the pressure to do better.

One example is Target, the retailer has set 4 commitments as part of its corporate responsibility strategy: environment, team member well-being, education and volunteerism. Offering more organic products, reducing packaging waste in their private labels, using energy more efficiently in the stores and buildings, are goals that the store chain has already met. But other critical actions, such as improving their sustainable sourced seafood selection is still a big challenge for the company.

Another example is Walmart, the biggest retailer world-wide, who has set its own goal of being supplied 100% by renewable energy and that also claims that have achieved a material diversion from landfills rate as high as 90% in countries like Japan and U.K, 81% in the United States and 70% in Mexico.

Similarly, Macy’s and Bloomingdales have entered this trend by creating a stronger and more creative online presence related to its sustainability strategy. The web-page macysgreenliving.com is solely dedicated to showing the work that these fashion retailers are doing towards achieving their sustainability goals. As an example, Macy’s own brand is part of the Sustainable Apparel Coalition, an international trade organization that works towards reducing social and environmental harm caused by apparel and footwear products.

The list of examples continues and from all the social responsibility reports it would be possible to argue that even big companies are trying hard to reduce their footprint on the planet. However, it is clear that these steps are very small compared to the long road that is still to be walked towards achieving a more responsible and sustainable general lifestyle. It will be interesting to keep an eye on what these companies can do to innovate and to turn the retail into a truly eco-friendly industry.

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Bergdorf Goodman, a luxury goods store like no other

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There are many luxury department stores, but only one Bergdorf Goodman, with just two locations, one across the street from the other, is that uniqueness what makes it so special and probably its key for success.

Located on the corner of 5th avenue and 58th Street in New York City, Bergdorf Goodman is one of the most iconic stores for luxury goods in the world. The store has been doing business since 1901, and its main building is still synonym of luxury and high end fashion. This is the place where shoppers from around the world buy their dream outfits, or where they come to be inspired by the new trends and see and touch exclusive collections from the best international designers.

Furthermore, designers also have to work hard to make their way into Bergdorf, and once in there, they have to be creative and put on those racks exclusive collections that will be on the spotlight of the international fashion elite.

But in times where people favor online shopping, what are some of the internationalmarketing strategies of this brick-and-mortar store? Is Bergdorf Goodman still a jewel in New York for luxury shoppers or is it facing hard times and maybe foreseeing an end to its exclusive business model?

The challenges are both related to finances and to customers’ taste. On the one hand, the store finances represent a challenge as part of the Neiman Marcus group (since 1987). The groupis currently considering selling in order to face a $5 billion debt as sales have declined in recent years. According to Bain & Co. sales of personal luxury goods fell 1% in 2016.

On the other hand, a big challenge for luxury retailers, is that consumers are increasingly mixing high and low fashion, for instance pairing sneakers from Adidas or Nike with an Alexander McQueen leather jacket.

To counteract these threats, the store offers different services that give additional valueto their customer’s experience, and focusing on an international market that can now reach Bergdorf Goodman from anywhere in the world.

 

Luxury goods shoppers can now shop online and the online Bergdorf Goodman store allows the customer to see the product’s prices in their local currency, which may be useful for clients that want to relate the store prices to their own country’s spending power. In addition, the store is proud to offer personalized services in 25 languages though their dedicated stylists, allowing shoppers from around the world to visit the store and enjoy a personalized experience.

 

The in-store personal stylists are fashion experts that put together a personalized selection for who requires the service, among the stylists customers can find experts on Channel handbags, casual clothing, tie and shirt combo for men, and even one that is on call 24/7.

Tourism in New York City also helps Bergdorf Goodman success. Walking down 5th avenue is a touristic attraction per-se, but few people cannot look at the Bergdorf Goodman windows without being amazed by the artistic decoration that the store carefully puts in each one of their window arrangements. These impressive windows have been a powerful marketing tool for the store. The store’s building is also well known in New York for being a dinning and tea time luxurious spot. It has one full restaurant on the 7th floor and a café for small plates on the Beauty Level.

Other highly personalized services include, the bridal salon that offers an exclusive selection of gowns and provide a comprehensive set of services for the entire wedding party: dresses, accessories, eveningwear, make-up and styling.

Furthermore, the store provides Fur Care and Storage. If customers need a safe space to store their fur during warmer months, the store have them covered. It offers a state-of-the-art, climate controlled vault, as well as pick-up, return, alterations, cleaning and glazing.

Finally, the store does not work completely isolated, it benefits from being part of the Neiman Marcus group. For example, by offering the BG credit card that offers InCircle points that are shared with other stores within the group.

In conclusion, offering exclusivity and personalized services are still the most important marketing strategies for Bergdorf Goodman. We should keep this store on the radar if we want to see what the future holds for luxury goods, both online and in-store shopping, because it seems like Bergdorf Goodman will keep thriving in the world or business.

 

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Sustainability is Trendy at H&M

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The H&M Group has come a long way since it was founded in 1947 with the first Hennes store opening in Västerås, Sweden. According to the company’s website, this retailer provided “frequently updated fashion at affordable prices.” The “M” was added in the 60’s and the retailer began carrying products for men, youth and babies. By the 90’s the brand was available online. By 2013 there are H&M stores in Europe, North America, Asia, the Middle East, Africa, South America, and Australia.

Today, H&M is expanding with new stores in Colombia and Kazakhstan and plans to expand with stores in Iceland, Vietnam and Georgia this year. H&M online will also reach new audiences in Turkey, Taiwan, Hong Kong, Macau, Singapore and Malaysia.

In addition to growth in new markets, the company is also focused on sustainability and global responsibility. H&M is a member of The Climate Group’s RE100 initiative that commits businesses to renewable power. But H&M is going one step further as the first international fashion retailer to join The Climate Group’s EP100 initiative “that encourages influential businesses to double the economic output from every unit of energy consumed.” H&M Group is taking these steps to reduce their climate impact. They even won the Global Change
Award in 2015 for innovations such as textiles from citrus juice by-products and an online marketplace for textile leftovers. The WWF International believes, H&M will “lead by example and to inspire the industry about what can and should be done to address key issues, such as climate impact and water scarcity.”

According to their 2016 Annual Report, 96% of the electricity used in 2016 was renewable. The report also states that the “H&M group is one of the world’s largest users of organic cotton, recycled polyester and lyocell, and is the world’s largest user of responsibly produced down.”

H&M 2016 Annual Report Innovations

H&M aims “to make sure to always stay ahead of trends and offer our customers fashion and quality at the best price, in a sustainable way.” These efforts are good for the environment but are also making a positive impact for the company in the eyes of consumers. Despite any up front costs the company may incur, they will reap the benefits in the future with reduced energy costs and increased public opinion.

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China’s Economy is Gaining on the U.S.

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“The United States has been the world’s biggest economy since 1871” but the economic giant might soon lose their position to China.

Since 1871, the United States has held that top position because we have been the leaders in population and productivity. With populations nearly four times that of the United States and more jobs moving overseas, we are seeing an increase in GDP per capita in China and India. This shift is the reason they are expected to surpass the United States as the number one economy in the world.

According to PWC’s “The World in 2050” report, “six of the seven largest economies in the world are projected to be emerging economies in 2050 led by China (1st), India (2nd) and Indonesia (4th).” The countries identified as emerging markets in this report were China, India, Brazil, Indonesia, Mexico, Russia and Turkey.

PWC The World in 2050

According to PWC, “China has already overtaken the US to become the world’s largest economy in purchasing power parity (PPP) terms” since 2014. However, China’s gross domestic product (GDP) per capita is not yet the largest in the world.

Also included in the report, emerging markets such as Nigeria are diversifying their economies and the growing consumer class is creating new opportunities for the retail industry in that country.

An interesting point made in the report was related to internet usage rates. Internet usage “gives retailers in these [emerging] markets the ability to reach new consumers in more effective ways to promote and sell their products.” As seen in the chart below, internet usage in emerging markets like Russia, China, Brazil and others have grown at a steep or steady increase, giving retailers a new segment of consumers to target with online advertising. Most of these countries are able to order products online from the United States and other countries, which affects both economies and retailers are quickly learning new ways to tap into these markets.

Growth of internet users in the E7 countries, PWC The World in 2050

Overall the growth of these economies is a good thing for the world. It means these countries that were once emerging or in poverty, are now increasing things like annual income, productivity, education and infrastructure to a level that competes with advanced economies even with a population four times the size.

International retailers should pay attention to shifts like this because it means that consumers in these countries will have more spending power and potentially open a whole new market.

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Global Powers of Retailing

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Deloitte Touche’s annual “Global Powers of Retailing 2017: The art and science of customers” report identifies the 250 largest retailers around the world and analyzes their performance across geographies, sectors, and channels.

Considering the increased popularity and ease of online shopping, I would expect the largest retailers to have an online presence with international shipping even if they did not have brick and mortar stores in other countries. With the amount of online shopping happening everyday, it would be hard to believe that some of the top retailers were holding their positions without shipping nationally or globally.

The Top 10 Retailers in this report:

  1.  Wal-Mart Stores, Inc.
  2. Costco Wholesale Corporation
  3. The Kroger Co.
  4. Schwarz Unternehmenstreuhand KG
  5. Walgreens Boots Alliance, Inc. (formerly Walgreen Co.)
  6. The Home Depot, Inc.
  7. Carrefour S.A.
  8. Aldi Einkauf GmbH & Co. oHG
  9. Tesco PLC
  10. Amazon.com, Inc.

For several years, Wal-Mart has been the world’s largest retailer. Most of the retailers on the Top 10 offer brick and mortar as well as some online shopping options. The only entirely online retailer is Amazon, which allows them to serve customers worldwide.

According to the report, 66.8% of the Top 250 retailers have foreign operations and on average those companies operate in 10 countries. In the chart below we can see a comparison of retail revenue growth and profitability by region or country. Africa shows the highest retail revenue growth, followed by China/Honk Kong, then Latin America.

Source: Deloitte Touche Tohmatsu Limited. Global Powers of Retailing 2017.

In China, “there appears to be a shift in growth away from investment and exports and toward consumer spending. There is a reasonably good chance that consumer spending will be the principal fuel for economic growth in China in the coming years.” This could explain the dramatic increase in China’s retail revenue.

The report also identified major economic trends in 2017 including backlash against globalization, deflation, low commodity prices, and developing country growth remains slow. “The US economy continues to chug along at a modest pace…the high-valued dollar has been beneficial to the US retail industry, helping to hold down the prices of imported goods, thereby boosting consumer purchasing power.”

It will be interesting to see next year’s report with changes in delivery for online shopping and economic growth in countries across the globe.

 

 

 

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