Tornado Effect in Retail: Leveraging Constant Innovation for Growth.

DOUGLAS M. SMITH - CHIEF INNOVATOR

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED

APPLE STORE LAUNCHES IN CONVENT GARDEN

WITH QUEUES AROUND THE BLOCK


RETAILERS LIKE APPLE ARE LEVERAGING
TORNADO EFFECTS
TO CROSS THE CHASM TO REACH THE HOLY GRAIL OF LIFE INSIDE THE TORNADO

TECHNOLOGY
TORNADO ADOPTION CURVE
APPLIES TO RETAIL

MAINSTREET
(CONCEPT
MAINSTREAMS)

CHASM
EARLY FULL
MOVERS ADOPTION
BOWLING
BOWLING
ALLEY
ALLEY
(FOCUSING)
(FOCUSING)


HOW WE KNOW THESE TORNADO EFFECTS EXIST?


BLOCKBUSTER, KILLED BY COMPLACENCY

WHILE RIVAL NETFLIX INNOVATES
AROUND CUSTOMERS.
©Photo by The Consumerist
2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED

“Even if you’re on the
right track, you’ll get run
over if you just sit there.”

Will Rogers 1879-1935

THE TRAIN IS COMING

"Shoppers are tuning out. Worse, they are
exhausted by their shopping experience
when they should be energized. That's what
happens when you force shoppers to think about
getting low prices when what they want is to feel
good about what they're buying. "
Al Wittemen - MD Retail strategy, Advantage Retail


SHOPPERS DON’T LOVE SHOPPING

I hate… • pushy or over-
enthusiastic staff
• music being
52% played too loudly
• having to queue
• battling with
crowds

Source: Mintel research

SHOPPER SATISFACTION DECLINING ± 15% / YR*

I hate… • arrogant and nasty
salespeople
• communal changing
rooms - even among
teenagers
• paying a small
fortune for something
that will go out of
fashion
Source: *IPG Media Lab & Mintel research

TYPICAL SHOPPER GOES THROUGH
THE BIG DIP

Initial
enthusiasm
Optimism Getting the
Anticipation product
Hope (if you’re lucky)

Pessimism
Frustration The process
Irritation of buying


RESULTING IN NEGLIGIBLE GROWTH
Retail Sales Index (3 months on previous 3 months %)
Chart to compare 1st estimate with 12 months later

Percent
RETAIL SALES INDEX
First Estimate (3 mo. on 3 mo. %) Value 12 Months later
2.5

2

1.5

1

0.5

0
Mar -04 Sep- 04 Mar-05 Sep- 05 Mar-06 Sep-06 Mar -07 Sep- 07 Mar-08 Sep-08

-0.5

-1

-1.5


LOW GROWTH IS HERE TO STAY
“The market scraped marginal growth in 2009 and I
see a low growth environment as here to stay. The
combination of a weak economic outlook and a changing
consumer means the industry is at a key inflection point as
it re-aligns itself to a new reality. What growth there
is will be absorbed by online. Like-for-like sales
will thus dip in and out of negative territory on a monthly
basis.” - Helen Dickinson, KPMG

Published by the
Source: KPMG/Synovate Retail Think Tank Whitepaper, Feb 2010 BRITISH RETAIL CONSORTIUM

MEANWHILE…
B2C E-COMMERCE SALES* IN EUROPE** 2006-2011
(billions USD and %increase vs. prior year)

(15.6%)

(20%) $406.8
(25.6%) $357.4

(28%)
$307.1
$255.7
(37.2%)
$196.9

$132.9

2006 2007 2008 2009 2010 2011
*includes online travel, event ticket and digital download sales; **includes Austria, Belgium, Denmark, Source: eMarketer
France, Finland, Germany, Greece, Ireland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain,
Sweden, Switzerland and the UK

PREDICTED TOTAL US RETAIL GROWTH IN 2010
2.5%
TOTAL PREDICTED E-RETAIL GROWTH IN 2010

11%
EST. GROWTH OVER NEXT 5 YEARS

10%/YR
VALUE OF E-RETAIL IN 2014 WILL TOTAL $249 BILLION.
Source: Forrester Research Inc. Report, “ U.S. Online
© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED Retail Forecast, 2009 to 2014”

VALUE OF US SALES INFLUENCED BY THE WEB BY 2014

$1,409,000,000
= 53%
OF ALL RETAIL SALES

Source: Forrester Research Inc. Report, “ U.S. Online
© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED Retail Forecast, 2009 to 2014”

ONLINE VS. HIGH STREET

Experience
SHOPPERS LIVE IN
Better choice TWO DIFFERENT
Time savings / WORLDS
convenience
Empowerment
Customer Service
HIGH
E-RETAIL STREET

SOME BRANDS ARE SHOWING
THE WAY FORWARD

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED Source: Interbrand Top 50 Retail Brands

FIRST RETAILER TO ELIMINATE COMMISSIONS

Source: BEST BUY ANNUAL REPORT

EARLY MULTI-CHANNEL ADOPTER

NOW INNOVATES AROUND CUSTOMER INSIGHTS

Source: BEST BUY ANNUAL REPORT

CREATED LIVING ROOMS TO SHOWCASE EQUIPMENT

BASED ON INSIGHTS INTO FEMALE BUYERS

CREATED GEEK SQUADS

BASED ON INSIGHTS INTO DIFFICULTIES
CUSTOMERS HAVE WITH TECH.


GEEK SQUAD NERDY ATTIRE IS INSTANTLY
RECOGNIZABLE

TURNING BLAND EXPERIENCES
INTO SOMETHING MEMORABLE

SERVICES 6% OF
+ = DOMESTIC REVENUE

CUSTOMER CENTRIC INNOVATIONS
IS FUELING GROWTH

NATIONALLY AND INTERNATIONALLY

THE TORNADO EFFECT IN RETAIL

1. LEVERAGE CONSTANT AND RAPID INNOVATION
2. THINK OUTSIDE THE BOX
3. TAKE RISK
4. FAILURE LEADS TO SUCCESS
5. FOCUS ON THE CUSTOMER, NOT SALES

Kakushin


“KAIZEN IS OUT. KAKUSIN IS IN.”

Katsuaki Watanabe
IN A 2006 INTERVIEW
WITH THE WALL STREET JOURNAL RIGHTS RESERVED
© 2009-2010 HOLYTORNADO LTD. ALL

SHAPES WHAT HAPPENS INSIDE THE FUNNEL


THE NEW CUSTOMER
JOURNEY INSIDE A
TORNADO EFFECT
DRIVEN FUNNEL


ENGAGE


MOST CAMPAIGNS FAIL IN-STORE

DESPITE DOING WELL ONLINE AND OFF

OUR OBJECTIVE NEEDS TO BE
TO REVERSE THE BIG DIP
“I’ve bought it!”

Optimism
Anticipation
Hope

Pessimism
Frustration
Irritation “I’m going somewhere else,
or not buying at all”


ENGAGE
> BE INTEGRATED


WHEN YOU DO A CAMPAIGN ONLINE, MAKE IT LIVE IN RETAIL.
CONTINUE THE JOURNEY AND THE CONVERSATIONS.

!WATCH HERE
http://www.youtube.com/watch?v=Ojx2wVWlx-0


ENGAGE
> BE INTEGRATED
>BE SURPRISING


LEVERAGE DIGITAL ENABLED WINDOW DISPLAYS
TO SURPRISE & DELIGHT

!WATCH HERE
http://www.youtube.com/watch?v=qN0PkWRj_Hs

USE CEILINGS AND WALLS TO TURN EVERY
SPACE INTO SOMETHING UNIQUE

Courtesy of THE EMBRYO STUDIO


ENGAGE
> BE INTEGRATED
>BE SURPRISING
>BE SMART


THINK LIKE A HAIRDRESSER

KNOW YOUR CUSTOMER & WHAT
THEY LIKE TO EARN STRONG LOYALTY

SALON PLAN B IN CAMBRIDGE, MA. HOLDS 15 MIN.
SKYPE CALLS WITH CUSTOMERS BEFORE THEY VISIT


ADIDAS miCOACH TAKES
YOUR TRAINING DATA IN-STORE


FOR A PERSONAL SHOPPING EXPERIENCE


ADIDAS mi INNOVATION GOES FURTHER WITH AN
INSTORE DIGITAL RUNNING TRACK


CONCEPT STORES NOW 43% OF ADIDAS RETAIL
SALES AND 50+% OF ALL STORE FORMATS!


ENGAGE
EXCITE

EXCITE
> BE REMARKABLE


APPLE RETAIL’S SPACE FOR KNOWLEDGE & SERVICE

50%


APPLE RE-THINKS RETAIL JOBS

• NO COMMISSIONS

• TEAM BONUSES

• FOCUS ON THE EXPERIENCE

• HIRE FOR PERSONALITY, ATTITUDE
AND CUSTOMER FIT. TRAIN THE
REST

• 3 WEEK IMMERSION ONLY ON
CUSTOMER RELATIONSHIP SKILLS
AND UNDERSTANDING CUSTOMER
NEEDS/LIFESTYLE

• ALL PRODUCT TRAINING ONLINE
(EXCEPT GENIUSES)

AND GET’S RECORD-BREAKING RESULTS!

Apple Retail 2001
Sorry Steve, Apple Stores Won’t Work
(Business Week)

Apple Retail 2004:
Fastest retailer ever to reach the
$1 billion mark a year

Apple Retail 2006
Fastest retailer ever to reach
$1 billion/quarter mark

Apple Retail 2007
Sales per sq.meter = $ 30,176
(as comparison: BestBuy = $10,643)


ADIDAS JAPANESE STORE IS MORE THAN A STORE


IT’S A PLACE TO…

SHOWER
CHANGE
LEARN
DESIGN
RENT
RUN!

DISNEY IS TURNING TURNING ITS STORES INTO
DISNEY IS ITS STORES INTO
“IMAGINATION“IMAGINATION PARKS”
PARKS,”


WHERE KIDS CAN CUSTOMIZE
THEIR OWN CARS TOYS,

PLAY IN MAGIC CASTLES,


CREATE
CHARACTERS
WITH A WAVE OF
A WAND,


AND ENJOY
THEATRE ALL
DAY LONG.


EXCITE
> BE REMARKABLE
>BE CONSISTENT


ADDING FUN BACK INTO HAMLEY’S
ADDING FUN BACK INTO HAMLEY’S


WHERE IT’S OKAY TO PLAY

ACTORS HIRED TO INVITE
PEOPLE TO TO PLAY

AND PARTY WITH THE STAFF IN THEME
DAYS AND PARTIES

AND PARTY WITH THE STAFF IN THEME DAYS & PARTIES.

£100K PROFIT FIRST QUARTER! SALES UP 5%


EXCITE
> BE REMARKABLE
>BE CONSISTENT
>BE RELEVANT


A SPORTS STORE THAT BRINGS THE
OUTSIDE IN

FEATURING CLIMBING
WALLS, MOUNTAIN BIKE
TRACKS, RAIN CHAMBERS
FOR TESTING WET-WEATHER
GEAR, FISHING PONDS,
ARCHERY RANGES &
PUTTING GREENS


HMV CONNECTS WITH GAMERS

CREATES GAMERBASE


AND ‘GETS CLOSER’ TO AN INSTANT COMMUNITY.


FRENCH MOBILE RETAILER MIXES
MUSIC AND PHONES


WITH LIVE CONCERTS AND PLACES TO
DOWNLOAD AND LISTEN TO MUSIC.


ENGAGE
EXCITE
EMPOWER

EMPOWER
> GIVE CONTROL


MOBILE APPS LIKE
SHOPSAVVY EMPOWER
SHOPPERS TO SCAN
PRODUCT BAR CODES AND
FIND CHEAPER PLACES TO
BUY GOODS

DOWNLOADED BY 4.5
MILLION USERS & 1 MILLION
BAR CODES SCANNED
DAILY.


MIELE IN VIANEN CREATES REACTIVE DISPLAYS
TAILORED TO YOUR PREFERENCES


INTERACTIVE MIRRORS EMPOWER
SHOPPERS TO FIND WHAT THEY WANT

!WATCH HERE
http://www.youtube.com/watch?v=Ojx2wVWlx-0

© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED SOURCE: CISCO BORDERLESS NETWORKS

GROWING USE IN FASHION (DIESEL STORE, GINZA)


PRODUCING STRONG RESULTS

MITSUKOSHI BUSINESS RESULTS

90% customer satisfaction
25% savings in staff time
15.8% increase in sales
revenue over previous year


EMPOWER
GIVE CONTROL
>
>BE CONVENIENT


A KIOSK OR MOBILE STORE ALLOWS SHOPPERS TO
PURCHASE STOCK THAT’S IN THE E-STORE


OPTIMUS LETS SHOPPERS CONFIGURE THEIR PHONE
ON THE SPOT WITH FILMS, MUSIC, GAMES.

!WATCH HERE
http://www.youtube.com/watch?v=Pt2xt7914f4
© 2009-2010 HOLYTORNADO LTD. ALL RIGHTS RESERVED SOURCE: DISPLAX

ANYTHING CAN BE VENDED.

FORGOT YOUR IPOD? BUY ONE HERE.

WHO NEEDS A CONVENIENCE STORE

WHEN YOU HAVE ONE OF THESE.

DON’T FORGET TO BUY THAT LUXURY COSMETIC


OR A PAIR OF SNEAKERS

THE NEXT TIME YOU’RE BAREFOOTED
ON CARNABY LANE.


OR EVEN A PAIR OF JEANS.

HOW ABOUT 64 VARIETIES OF FRESH ICE-CREAM

MIXED FRESH IN THIS $15 MILLION MACHINE

AND YES YOU CAN EVEN BUY A CAR.

NOT THIS ONE, IT’S A CAMPAIGN.


BUT THE MORGAN HOTEL’S VENDING SHOP,

WILL SELL YOU A BENTLEY.

EMPOWER
GIVE CONTROL
>
>BE CONVENIENT
>BE CONNECTED


BLOOMINGDALE’S
DRESSING ROOM
MIRROR LETS YOU
FACEBOOK
FASHION WITH
FRIENDS


21 MILLION CUSTOMER REVIEWS & COUNTING

21 MILLION CUSTOMER REVIEWS & COUNTING


WHY DO LOYAL CUSTOMERS PHOTO THEMSELVES
ALL OVER THE WORLD?

MOOSEJAW PUTS CUSTOMERS AT THE CENTER.

IN FACT, THERE’S NOT MUCH THEY
WON’T DO FOR YOU

!WATCH HERE
http://www.youtube.com/watch?v=fnkDt5xq2M4


WHICH IS WHY THEY INTEGRATED THEIR WEBSITE,
MOBILE & POINT OF SALE SYSTEMS…

TO PROVIDE A SEAMLESS
SHOPPING EXPERIENCE.

THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, HAVE
FUN NO MATTER WHERE YOU ARE

THAT WAY YOU CAN PARTICIPATE, READ REVIEWS, &
HAVE FUN NO MATTER WHERE YOU ARE.

OH, AND IT DOES GIVE GOOD RESULTS TOO
Increase in conversions:

3 to 4%
Increase in sales:

+10%
Increase in items sold/visit

1.9 to 2.5

TORNADO EFFECT RETAILERS ARE
DRAMATICALLY CHANGING THE
GAME AND GIVING SHOPPERS
WHAT THEY WANT:
A GREAT SHOPPING EXPERIENCE
WHERE THE CUSTOMER IS IN
CONTROL.


PROCESS
1. KNOW YOUR CUSTOMER

2. IDENTIFY KEY DECISION POINTS WITHIN
YOUR STORE. THESE ARE KEY IN-STORE
CONVERSION MOMENTS.

3. SET YOUR BENCHMARKS

4. PLAN YOUR STORE EXPERIENCE
AROUND THE CUSTOMER

5. DESIGN YOUR STORE INTERACTIONS TO
EXCITE, ENGAGE AND EMPOWER

6. TEST AND REFINE YOUR APPROACH

7. MEASURE THE RESULTS


READY TO CREATE YOUR OWN TORNADO
EFFECT?

DOUGLAS@HOLYTORNADO.CO.UK

CALL NOW: +44 772 4 03 91 68


Tornado Effect in Retail: Leveraging Constant Innovation for Growth.

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Tornado Effect in Retail: Leveraging Constant Innovation for Growth.