Retail lessons from USA

In March, 26-31, the group of Russian and Ukrainian entrepreneurs visited leading American retail companies. The main goals of the trip were appraising the best retail practices and adopting the colleagues’ experience. 

FASTFORWARD organized comprehensive program, which gave its participants an opportunity to evaluate the latest trends in food and non-food retail. 

Organizer:  - FastForward

During the first day participants were told about retail market development by Saint Joseph's University business school representatives. The whole USA retail industry is a divided pie. It is very hard for a new company to enter this market, but there is always a nice chance for those, who can offer an unconventional solution.

Lesson 1

Segmentation is main distinctive feature of American retail. Even such a tough discounter as Wal-Mart has begun to divide its stores to big and smaller ones providing different choice of goods and using varied ways of management.

Discounters are doing better than any other kind of stores in USA. This segment is growing faster than others. Everything that is expensive and premium becomes luxury even for the regular clients due to the crisis and stagnation. In general, premium stores are doing well, but their turnover can’t compete with “one dollar” stores one. High quality goods with big margin can’t be affordable for everybody. Developing relationships with clients is harder for the companies, which are in the middle position.  Average quality and price aren’t attractive for the consumers. They want either good service and quality or low price.

The main American retail lesson says: we need to differentiate and to know our customer and his interests and to move in this direction. You can’t be at the highest level in everything. But the customer is ready to pay only for the high level. 

Lesson 2

Uniqueness in everything. If Whole Foods claims, that they work only with organic goods, so everything has to be of the high level. Suppliers have to grow products, which then must be delivered in a certain way, washed and prepared according to the strict rules.

If we are talking about meat and fish, the animals’ fate becomes the main topic. Animals should be treated well and killed with humanity.  Fish must be caught carefully, the way its health and condition wouldn’t be harmed.  
Main motto: to get maximum of quality. 

Lesson 3

Impression and atmosphere

For the first time during this business-trip there was a meeting devoted to the consumer behavior. American distribution networks pay a lot of attention to learning customers’ reactions. Among principal trends we can mark out the main one: the buyer wants to get his goods quickly, with appropriate service and without unnecessary moves.  That is why prepared meal, which has meat, vegetables and spices in needed proportions, is so popular.

Clients like companies that take care of them, save their time and offer good quality. Store managers often ask themselves: what kind of feeling does the customer have while visiting and will he return here?

For example Trade Joe’s have created family atmosphere. The stores have been decorated with country style, price tags are written by hand. While saying goodbyes to the costumes the cashier strikes the gong to welcome the next one. One can say that these are nothings, but customers like them. 

Lesson 4

Business. The author of this lesson is Wawa, network of the stores near the filling stations. The company showed the classic example of well-timed business strategy change. When it became clear that it is hard to earn only by selling fuel, the filling network tried to give its clients good impression. While coming for the fuel customers gladly buy coffee with croissant, fresh strawberry, etc.

Customers like those stores because of their comfort and simplicity. After having made the retail development strategy to be prior the company keeps going with confidence. Wawa became small store network for middle class. Customers flow is attracted by fuel while profit is granted by retail.

Lesson 5

Result is the main. There are several advanced electronics networks in USA: Best Buy, HH Gregg, Gerhard Appliance. Best Buy operates huge stores, where prices and service are low. HH Gregg can’t compete with Best Buys’ prices but has better service. The shop assistants in HH Gregg are very well-trained. Each wears ironed shirt and holds folder with the pen. Every client will be asked 7 obligatory questions to find out his needs for electronics. They won’t try to offer you something before they exactly know what you need. But after the choice has been made they will give you delivery and adjustment advices.

Interesting detail: those stores have big mattress sections. Why don’t you offer your clients to by mattress along with the TV? And by selling mattresses company earns more compared to TVs (mattresses have bigger margin).

Gerhard is operated by one family. Their main advantage is the home atmosphere. Only here durable big kitchen furniture sets are sold. Due to this special future company has found its spot in narrow market. 
All three players are selling similar goods but gain business results with different ways. 

Lesson 6

Effective innovation. The example of the effectiveness is Wal-Mart. Everything is organized in here the way it reduces the company costs. Wal-Mart knows that company won’t be successful unless its partners are succeeding. That is why company tries to develop its suppliers business. 

Logistic, packing, product size – everything matters for client. That was the reason why Wal-Mart insisted on changing the washing liquid bottle packing from Procter&Gamble. This new packing surprised customers and provided 100% of used space while transportation. Company also regularly holds trainings for its partners “How we can be effective together” to develop their businesses. In the CNS distributions centeralmost all the work is done by robots. Due to this the company provides its stores with quick logistic, gathering and products transportation. The Center works up products from different suppliers and can work with different clients. 

Wegmans, premium stores network, offers merchandises of good quality and excellent service. They are using the concept “What is being bought should be on the shopboard”. Different goods with big margin (about +20) are being sold near cash desks. 

These are only several lessons that were seen by managers from Ukraine and Russia in American retail. The participants of the management-tour continue to draw the conclusions and share impressions. 

“The most useful meeting for your company was in Whole Foods. The meeting program was on the highest level. We should admit that this networks’ success begins from its personnel!
The managers widely and professionally answered all our questions. We were impressed by their concern. Even if the question is outside of their competence they won’t go away. They give attention to every customer and know everything about merchandise from its production place to technical issues. The atmosphere of trust, excellent service and high quality goods leaves no chance to go to another store.

We saw that the format of store we have accustomed to is dying. The part of discounters and “middle +” is growing bigger in USA. This trend was also confirmed by the lecturers of Saint Joseph’s University. We had had some estimates before but during the tour we received evidence that good level shops and discounters are the future. Middle is disappointing the clients.
The meetings with Wal-Mart were interesting. It was useful for us to get to know about their distributions center work. Though there are a lot of those kind of centers in Europe and Russia but we actually don’t have much time to revise the work of the enterprise. We had an excellent opportunity to evaluate our colleagues experience and success.

All participants of the tour have professional advance in some spheres so the communication was interesting and efficient. We would like to thank Dmitriy Bondar and the whole team for the idea and organization”.

Elena Shelkoplyas, The Head of  “Dymov” Company Financial Department (Russia)

“We have only positive impressions from this tour. We appreciate the organization and high level meetings. Not only we saw how the business works but also had an opportunity to communicate with owners and directors of the sectors and stores.

It would have been interesting to learn more about inner processes of companies – to see the office work organization”.

Alexandr Yuhno, Fozzy Group Project Management Office Director (Ukraine)