January/February 2008
A Retail Publication by
In anticipation of slow economic growth, retailers are acting to
protect the bottom line. By reducing capital investment, analyzing
inventory, optimizing staff, or slowing expansion plans, companies
are moderating their long-term goals in favor of short-term
initiatives. As one struggling retailer put it, “We need to put things
out there quickly, to test and refine. We don’t have time to wait for
what is perfect.”
Where do you find quick wins and new brand connections? In a
recent interview with The Wall Street Journal CEO Mike Ullman
shared J.C. Penney’s approach for finding opportunity in a
slowing economy: Go after a bigger piece of the existing
customer’s wallet while attracting under-penetrated segments.
Not with price cuts, but by adding more variety, newness and
concepts crafted to excite the shopper. For example, in-store
Sephora boutiques were one of the store’s top performers during
the holidays. There will be no dialing back on their plans for the
exclusive American Living clothing line from Polo Ralph Lauren.
The commitment is long-term, and will give the customer a lot to be
excited about.
“When speed is crucial, audit your store experience,” says Scott
Smith, Design Forum senior vice president, design and planning.
“That’s where you’ll find plenty of opportunity for quick wins. Your
first inclination might be to cut prices, but only Wal-Mart is in a
position to do that.
“Improving the shopper’s perception of the brand is a potent strategy
for winning back consumers. And it can be done with relative speed
if you focus on relevancy. Things may have creeped onto the sales
floor that have nothing to do with your master brand. Or the
merchandise just doesn’t speak to the needs of your target segment.
You do need to take the time to get accurate and actionable customer
insights so you can fix the right things—those that make the biggest
impression on your shoppers.”
According to Smith, the additional good news is that, like Penney’s,
businesses can pour resources into making stores more productive in
the short term without having to completely reverse long-term plans
for a more powerful brand vision, advanced store prototypes, or
finding where to compete in the future. With careful management,
present and future plans can run on parallel tracks.
“We’ve seen companies succeed at this when they take the time to
establish a strategy framework for learning what their ‘store of the
future’ should look like and which experience innovations will result
in the fruitful quick wins they need today,” says Smith. “One doesn’t
have to stop for the other.”
A couple years before International House of Pancakes bought
Applebee’s, America’s neighborhood grill and bar was getting a
little tired. The company had taken many operational actions to do
things better and faster. Diners still appreciated its convenience and
casualness, but were unenthused by the food and the service
experience. The casual dining leader had become generic—a
category, not a brand. Sales were slowing and franchisees wanted
action, while Applebee’s delayed a new prototype in favor of
meeting short-term earnings goals. But “better and faster” didn’t
produce results. The numbers didn’t budge. The company realized it
needed to innovate by doing things differently.
Finding
Quick Wins
Applebee’s began work to make their brand more relevant. Quick wins
included a new menu and a retrofit design with key brand drivers to make
customers feel good again. Simultaneously, Applebee’s asked Design
Forum to create and test three virtual prototypes to see which would have
the best chance for increasing frequency. Analysts have said that
Applebee’s needed to remodel its dated restaurants, a major investment for
the 1900-store chain. With solid plans for the future and stores currently
executing against the new vision, the inventors of casual dining were
acquired by IHOP with high expectations.
“Sustained success is possible when retailers elevate the store experience
while simultaneously pushing the envelope on their brand,” says Smith.
“This ‘parallel tracks’ approach helps ensure that your concentration on the
short term will not lead to mediocrity in the store. The brand evolves
holistically.”
Retailers with really large networks are especially concerned about how to
show improvement in existing stores. When there are so many stores and
so little time, a strategy framework becomes essential.
Mid-tier hospitality leader Holiday Inn spent five years getting its house in
order in preparation for launching a radical new image in the form of a
ground-up prototype slated for 2009. In partnership with Design Forum,
Holiday Inn spent most of 2007 working on a new vision for its identity
and experience. It led to an innovative and aggressive quick-win retrofit
program based on building customer relationships at the brand touchpoints
that matter most to their guests. Holiday Inn also initiated a new service
culture to ensure hotel staffs develop the behaviors and skills that fit with
the brand ideal. Their transformation made business news headlines when
it was unveiled to a standing ovation from over 4,000 owners and
operators last fall. It all began with a strategy framework for learning what
their future should look like and determining which experience moments
to invest in for the short term. The franchise looks to be reviving the
essence that was lying dormant in its brand for so long.
“An economic slowdown is like one big long moment of truth. It’s the
ultimate test of who you are as a brand,” says Smith. “The key is not to
abandon your long-term goals. You can strategically map out the future
with quick wins to use right now. From what we’ve seen, companies that
power ahead in times like these turn out to be the most successful when
growth returns to normal.”
Chairman’s Commentary

Building Confidence
I’m not convinced we’re headed into a full-
blown recession, but all the signs point to a
challenging period ahead. So, many of our
recent client discussions have centered on how
to make the best of business in such a climate.
Stay fresh. “Innovate” is the retail rule that
doubles in importance during an economic
slowdown, so consider escalating your efforts in
the search for new ways to present your
offerings, as well as freshening the mix. Stores
are enormously vulnerable to becoming stale
and left behind if that innovation engine isn’t
constantly chugging away. And it can’t be just new, your ideas must
also be relevant to people’s deeper concerns—value will certainly be
a major one, but overall store experience can make or break the
shopper’s choice, especially if she feels the need to choose between
a shorter list of retailers this year.
Keep track of how customers are spending
their money, time and energy. Last year the
People have money
green movement exploded and most of us are
in passionate pursuit of the latest developments
but lack confidence.
Whole Foods versus the Baconator. Last year we saw the natural and
organic food trend culminate in Whole Foods’ acquisition of its rival
Wild Oats. And famous restaurant guide Zagat’s rated Wendy’s
best-tasting fast food burger. The extremes are relatively easy to cater
to. However, the average shopper will need to feel good about the
healthy choices they are making for their family as well as their
indulgences. Mom is still the family’s center, but dads are there too,
spending more time with the kids. They need recognition in the
marketplace. The older crowd has become less predictable.
Paradoxically, “retired” doesn’t mean you’re not working. Teens are
the one group not planning to slow their spending anytime soon. It’s
just harder to reach them since they’re multi-tasking, using more than
one medium at a time.
For all segments, personal, social and family life is organized via
technology. It’s responsible for the explosion in choice and individual
expression that’s making us so contradictory. Those contradictions
make it more challenging to guess the logic behind shopper choices.
Intuition is still good, but shopper research is
better. As trend experts tell us, everyone seems
to believe they belong to a market segment made
up of exactly one person.

in sustainability. West Elm and Elephant Pharm just entered the
LEED Retail Pilot Program (Leadership in Energy and
Environmental Design) to help develop guidelines for all future
retail projects. I’ll have you know, the first LEED-certified retail
project in the U.S. was right here in Ohio, an 80,000-square-foot
Giant Eagle supermarket that gets 50 percent of its electrical energy
from wind generation. J.C. Penney and The Home Depot are
beginning to identify products by their earth-friendly attributes. So,
judging from the buzz, your shoppers clearly want you to help them
feel they are doing something positive about fair trade, energy and
the environment.
Small cars and big TVs. A quick look at other trends from 2007 will
make you think we are living in a parallel universe. Or maybe many
parallel universes. For example, even though some of the most
exciting new models at the Detroit auto show were the bad-boy
performance cars like Dodge Challenger, with oil at $100 a barrel,
the likes of Smart and Prius will find a welcome market. Sales of the
trucks and SUVs that have been serving as our mobile living rooms
may slow down a bit more. Our actual living rooms could become
the personal retreat of choice, thanks to pain at the pump and the
countless sleek stylish television sets, computers, high-definition
everything and downloadable programs now available.
Against this backdrop of an increasingly splintered society and
forecasts for smaller gains in retail sales, we are advising retailers to
optimize current assets. Now’s not the time to be conservative in the
store. Find areas of your store that could work harder. Since more
products don’t always lead to more sales, rationalize assortments. And
always see things from the shopper’s perspective. What you think is
important may mean little or nothing to your customers, so make sure
they give you credit for
in-store investments.
The upshot is, there’s still plenty of blue sky out there. The retail
business will grow in 2008, just not as much as in previous years.
People have money, but lack confidence since their home values in
many cases have decreased. Do anything you can to be emotionally
compelling, help justify purchases and deepen the brand relationship.
As always, companies that invest in innovation now will come out of
this slowdown faster and in better shape than those that don’t.
Thoughtfully,
D. Lee Carpenter
Chairman & CEO

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A Retail Publication by: Branch Offices: London,
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D. Lee Carpenter, Chairman & CEO
Jill Davis, Editor
Amy Niswonger, Design/Production
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© January/February 2008
 GuestFeature
The idea that growth can be good is the
argument made by William McDonough
and Michael Braungart in Cradle to Cradle.
(North Point Press, 193 pages, 2002). Take
a look at nature, the pair says, and you’ll see
that growth is not only good, but necessary
—that nature’s very abundance is what
environmentalists (and the rest of us)
depend on and celebrate. The key is the
right kind of growth—and the key to that is
better design.
human ecological footprint, we offer a
different vision. What if humans design
products and systems that celebrate an
abundance of human creativity, culture, and
productivity? That are so intelligent and safe
that our species leaves an ecological footprint
to delight in, not lament?”
[Much of the] book is devoted to explaining
how to translate that theory into practice.
[The author’s] strategy is eminently
graspable, for it is based on the straight-
Executives intent on becoming
literate in the principles of sustain-
ability undoubtedly consider this title
a must read. Published in 2002, the
Cradle to Cradle philosophy has
become part of the international
business vernacular. For products,
C2C certification is now an impor-
tant sustainability benchmark. Top
universities have made the book part

Better,
of their curricula. It has inspired
forward principles that waste is food, that
young industrial designers, archi-
by Hal Clifford there is no “away,” that everything is part

By Design
McDonough, an architect, is the founder of
McDonough + Partners and has received a
slew of awards for his environmental
designs. Perhaps most impressive, he was
hired by the Ford Motor Company to turn
the firm’s original manufacturing plant into
a green automobile factory, a $2 billion
undertaking. Braungart, a German chemistry
Ph.D., cut his teeth leading Greenpeace’s
chemical division, then went off to found
the German Environmental Protection
Encouragement Agency, which helps
companies design products with an eye to
their entire life cycle.
Reading McDonough’s and Braungart’s
manifesto will be alternately remarkably
encouraging and deeply depressing. Take
the authors’ analysis of recycling. Recycling
is good, right? In fact, they say, it is often
very, very bad. For example, recycling
plastic bottles into that groovy fleece jacket
means bringing toxic antimony into contact
with your skin. Oops. Or how about being
more efficient? We know that’s always
good, don’t we? Um, actually, no: “Being
less bad is not being good,” says
McDonough. “If you want to go to Mexico,
and you’re driving toward Canada, even
if you slow down you’re still going
to Canada.”
But just when you’re beginning to despair
about environmental solutions, you
encounter an idea [like] this: “We see a
world of abundance, not limits. In the midst
of a great deal of talk about reducing the
tects, engineers and chemists who are
of a cycle.
now ready to act on change. Because
According to Cradle to Cradle, waste (which it offers a technical solution that
is what most pollution is) is a product of bad doesn’t mean less economic activity
design. Regulations are enacted to control and more regulation, progressive
waste, but the message of regulation is, “Be corporations are willing to look at it
less bad.” Good design says, “Be good.” as the framework for moving
Traditionally, designers of economic towards a sustaining future.
processes tried to increase profits and reduce
costs. The easiest way to do that was to
“externalize” waste as pollution. But as
“away” gets closer to home, that becomes
less acceptable. Change the game, say
McDonough and Braungart, by changing the
objectives; don’t seek only to profit
financially. Ask yourself, “How can we love
all the children, of all species, for all time?”
That’s a little woo-woo, perhaps (and
happily, there’s very little of that in this
book), but it sums up the paradigm shift
proposed by Cradle to Cradle. Impressively,
that shift is being implemented in material
ways in decidedly non-woo-woo companies
such as Herman Miller, Steelcase, Ford,
and Nike.
starting to grasp this, and Cradle to Cradle is
McDonough and Braungart are careful not to one blueprint for how they, and the rest of us,
be too glib about technical cure-alls, noting can profit from that consciousness.
that the sort of change they propose is going
Perversely, their book may lead you to stop
to be incremental, spurred on by individual
recycling your SoBe bottles and start buying
commitments to environmentally sound
virgin printer paper—but it might also drop
living. Consumers increasingly recognize that
sustainability issues right onto the CEO’s desk,
the dollars they spend support a whole
which is precisely where they need to be.
system, and that they can choose between
organic food and factory farms, coal burning
Hal Clifford, journalist, author and speaker has
plants and wind generation, fair trade and
written for the New York Times Magazine, The
exploited Third World workers. Today, we
Wall Street Journal, the Boston Globe; appeared on
can learn a lot about the companies behind
CBS Evening News, Larry King Live, CNN, and
the items we purchase, and once we know,
NBC Nightly News. He is executive editor of Orion
it’s hard not to make conscious—and
Magazine. hclifford@orionsociety.org
conscientious—choices. Companies are