As Seen in CFO Studio Magazine Q3 2015 Issue
CHALLENGES AND OPPORTUNITIES OF SELLING IN AN INTERNET-CONNECTED WORLD
The rapid adoption of online shopping by consumers worldwide has opened new sales opportunities to retailers, and in many cases, has helped to cut selling costs.
But online sales have also forced companies to reexamine the way they drive traffic to stores, integrate online and retail channels, and maintain customer loyalty in a connected world, according to CFOs who took part in a panel discussion entitled, “Retail Success Strategies and Managing Business.” The panel took place at the CFO Innovation Conference, attended by over 400 CFOs and other executives, and held recently at MetLife Stadium in East Rutherford, NJ.
Online retailing offers companies more ways to interact with consumers, but it can also create operating headaches, reported Michael Mardy, CFO of Tumi Holdings, Inc., a South Plainfield, NJ-based company that offers a comprehensive line of travel and business products and accessories in multiple categories. “We compete on quality, but the Internet allows people to immediately do price comparisons with competitors, and this can make it difficult to ensure that reseller partners maintain the manufacturer’s suggested retail price.”
Other companies face similar challenges. Steve O’Connell, CFO of Lenox Corp. — a Bristol, PA-based leading tabletop and giftware brand — noted that his company has minimum advertised pricing (MAP) policies, with a tiered structure that varies by selling outlet; but he also reports problems with discounters. “However, brand quality can help a product to stand out,” he said.
Godiva Chocolatier, Inc., a New York City–based luxury sweets company, gets that concept. Godiva CFO David S. Marberger said his firm continues “to work on ways to drive people to our stores,” offering bright, splashy website graphics designed to tempt customers to make a trip to a Godiva shop, while giving them the convenience of online ordering.
“Either online or at a store, you’ve got to make the shopping trip a positive, convenient experience for them,” he added.
Part of creating the shopping experience involves brand management, which can be challenging in a global environment.
Godiva has a global brand, “but we tailor it to local tastes,” said Marberger. “A big seller in Japan is our ‘diamond’ piece, which retails for $25. The U.S. is a bit more price-competitive, so we have to be aware of that, but we are able to achieve leverage from our global presence by importing some practices when it makes sense to do so.”
For its part, Lenox maintains the consistency of its brand while tweaking the product mix to meet national demands, according to O’Connell.
Companies are also using big data — huge amounts of structured, semi-structured, and unstructured data that can be mined for information — to stay ahead of trends and to stay connected with individual customers, noted panel moderator Mark Mishler, a veteran CFO who has held positions with publicly traded and private equity companies.
Tumi, for example, achieved some unexpected insights after analyzing the “tremendous amount of information” on its customers, said Mardy. “We always thought we were a men’s brand, but it turns out that women account for more than 60 percent of the purchase decisions about our products.”
But integrating the information from all sources in a useful way can be a challenge.
Marberger, for example, said that Godiva sometimes struggles to patch legacy systems together. Lenox’s O’Connell said that his company is investing heavily in IT reporting systems, “though not so much in big data activity.” —Martin Daks