March 2010 | Commentary | Checking In

Retail Week at a Glance

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Keith Biondo is the publisher of Inbound Logistics magazine.

Ispent one week last month immersed in retail logistics. After attending Fashion Week in New York, I headed straight to the Retail Industry Logistics Association meeting. Retailers are adapting and evolving at an ever-quickening pace. Here's the latest:

Monday: Emerging Markets. Some global fashion and apparel brands expect emerging markets to drive 70 percent of future growth. China, India, Latin America, and other areas are quickly developing a "consumer class" with a taste for top brands. Developed markets such as the United States and Europe may grow slightly, but that's not where the retail excitement is.

Tuesday: Not a Candy Bar. Net-connected vending machines are being used to sell everything from $18 headphones to $400 iPhones and cameras.

Wednesday: Force Equalizer.Small retailers use the Net to compete against large companies. Amazon, for example, gives small companies huge reach without the cost of bricks and mortar, large payrolls, and infrastructure. That margin goes to price, and price reductions drive sales.

Thursday: Free Shipping. Amazon's shipping affinity program reaps results by delivering high repeat sales. For a $79 annual enrollment fee, customers ship free when they buy. The approach works; customers come back at higher rates. Alice.com has created another way to ensure repeat orders: Customers schedule auto-repeat delivery of consumer products, such as toilet paper, soap, and dog food. The products are picked, packed, and shipped—free again—direct to home.

Friday: Private Labels. As the consumer class shops down market, smart retailers are investing in private label brands, hoping to convince consumers they are just as good as national brands. On both national and private label brands, retailers are identifying and eliminating under-performing SKUs, cutting costs, reducing complexity, and focusing on what sells at the best margin.

Saturday: Social Networking. Buying trends travel at hyper-speed thanks to social networking. Some e-tailers are using "companion shopping," where friends take a virtual shopping trip and comment on styles and colors while making their purchases. Others, such as PETCO, publish customer reviews on their Web site and push them out via e-mail. Twitter and other social networking venues enable a fashion craze to whip around the world at light speed. To capitalize on what's hot, retailers must scale quickly and globally.

Sunday: Don't Reinvent. These trends will change the current of product flow and global trade. If you play in the retail space, borrow what works and you can go with the flow instead of swimming against the tide.

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