Retailers – Naughty or Nice in 2010?

by Rocco Tarasi

Retailers - Naughty or Nice in 2010?With the holiday season behind us, I wanted to write about some of my observations of retailers and products during this holiday shopping month.

Charity giving at the register. When I was making a $50 purchase at the local Pottery Barn, as I was paying the clerk asked if I’d like to donate $1 to St. Jude’s Children’s Hospital. I think this is a terrific way to raise money (and I said yes). First, I’ve already taken out my credit card, so that barrier is gone. Second, they didn’t ask me if I wanted to donate something – which forces me to think of an amount – they asked me if I wanted to donate $1. Third, the average purchase at Pottery Barn has to be at least $50, if not more – what is an extra dollar compared to your current purchase?

What was interesting was that during a trip to Williams Sonoma (owned by the same parent company), they also asked at checkout if I wanted to donate, but didn’t suggest an amount. While I did donate, I’m honestly not sure that I would have if I hadn’t already gone to Pottery Barn first – and I expect that their conversion rate is a lot lower as a result of leaving it up the customer to choose the amount. (Though it’s possible that the amount they raise is higher.) You can learn more about the St. Jude program here.

Spend a dollar to make a dollar. At the mall I walked into a Gap store, and after a few seconds of browsing I noticed a checkout line eight customers deep. The person next to me noticed too, and we both turned around and walked out of the store. How many sales did that store lose that day, because they didn’t hire one or two extra seasonal workers?

Innovation window dressing doesn’t change who you are. My wife went to Jared, self-proclaimed “Galleria of Jewelry”, to buy a bracelet. Her first impressions were very positive – nice store layout, lounge area with drinks, and even a kid’s area to play in. Then the reality of the chain jewelry store set in. She knew exactly what she wanted, but that didn’t save her from the 30 questions the salesperson asked her to try and get her to buy something else.

I went to the same store, and while I didn’t get the pushy sales treatment that she did, I was just as annoyed when the salesman started asking me for my name and address at checkout – as if this information is required to purchase jewelry.

How to build a business around one product. Speaking of buying a bracelet, have you heard of the Pandora bracelet? Their store was one of the most crowded at the mall. I love the business model they use for their bracelet. First, it’s a low barrier to entry with a relatively inexpensive bracelet ($50?). Then they have literally thousands of charms you can buy, ranging in price from affordable ($30) to luxury. And the bracelet can easily hold 15 charms. A gift that you can always add on to, with enough variety and price points to apply to a wide range of shoppers.

Apple stores are fantastically sparse… but they’re still sparse. Like most people, I love walking into an Apple store. Friendly workers, awesome design, cool gadgets, no cashier counter – it just makes you want to buy something. But unless you’re in the market for (1) a computer, (2) a music player, or (3) a tablet, there isn’t anything left to buy! I find myself leaving the store repeatedly empty-handed – but wishing I had bought something.

Continuing the “less is more” theme. Like the Apple store, Nordstrom has always done a good job of making their stores appealing by not cramming every square inch with merchandise. Less equals more. It is something that you don’t fully appreciate until you walk into another store… like Dicks Sporting Goods.

To be fair, Dicks does a better job than other sporting goods stores in providing a decent way to navigate and find what you are looking for, but over the last few years they’ve gotten worse, not better. If you are looking for, say, exercise shorts, there are no less than 50 different places in the store to find them. Part of the problem is that clothing is organized by brand, but even within one brand area it’s an adventure trying to comb through all the different racks to compare items. It’s a frustrating way to shop.

Accessorizing makes one product ten. I’ve learned that women’s Hunter boots are in style these days. Like a lot of fashion trends, there isn’t much to the boots – they seem to basically be made of solid rubber (but definitely not priced as such).

But sold separately from the boots are optional liners. These liners come in styles like cotton and fleece, and many different colors, but in a very smart design move the liners fold over the top of the boot by several inches and sport their own Hunter logo (because folding them over the top of the boot covers the boot’s logo). Women can then purchase and use different liners to match what else they are wearing. One boot with 10 liners practically equals 10 boots. Genius.

Selling booze with discounts and education. Pennsylvania wine stores are monopolies, but one thing that monopolies tend to have is pricing power. The state will often buy significant quantities of wine at a deep discount, and then (presumably) pass some of that discount onto consumers.

The state has a program called “Chairman’s Selection” to promote these wines, and given that most people don’t know anything about wine and buy on price, putting a “Chairman’s Selection” sign on the wine and advertising it as a “$28 retail price for just $15.99” is generally a pretty good way to sell wine. But I noticed that this year they did something different – they included a chart on the sign to rank how sweet the wine was. Most wine drinkers know how sweet they like their wine, and this visual clue takes some of the uncertainty out of the purchase – presumably leading to more sales (at least in my case).

That’s it – some business and sales strategies that worked, and some that didn’t to close out 2010. Happy New Year!

Editor’s Note: A while back I published a free white paper on ‘Charitable Innovation‘ that you might enjoy


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Rocco TarasiRocco Tarasi was an accountant, investment banker, and CFO before becoming a technology entrepreneur.