Today’s impenetrable retailers always have two things in common: One, beyond service alone they understand that a brand is a promise wrapped in an experience. And two, that people, whether they be called associates, cast members, employees or even geniuses, remain the single most important variable in brining that retail experience to life. Do these brands deliver scalable and sustainable profitability? Sure. But stakeholder value is the key measurement here and the more constituents you examine, the more you see the value that these brands deliver and deliver big.
Apple Store: Any and all lists of best retailers starts with The Apple Store: $7,500 per square foot in an average location, with one store (5th Avenue and 59th Street in NYC) doing $35,000 per square foot which in that store’s case amounts to $35MM in revenue per year. Yowza. Also the number one employer in the country, was first to embrace to end of the cash register, displays no inventory, encourages play and interaction, and hires geniuses to help. From the beginning, Apple brand built on design and innovation, never more on display than in its brick and mortars… Apple Stores are more than a store… they are a retail event on a daily basis.
Virgin: This airline makes long distance air travel aspirational without aspirational pricing: Richard Branson’s approach of dogma heresy means putting every sensory element of airline travel up for debate and scrutiny and building from there. And while the lights, the sounds, the technology all contribute, it’s the people that make the difference: From a 250 question screening survey to a gauntlet of interviews and 5.5 weeks of paid training, Virgin sets a very high bar when it comes to choosing the people who will deliver its brand on a daily basis. Today, like Steve Jobs, a good question when evaluating your retail experience is asking, “What would Richard do?”
Southwest Airlines: A second airline but a forever worthy addition to the list based on a model that to this day other airlines, especially the majors, can’t seem to replicate. Built on love, not fear; built on being humane, not glib; democratizing flying in America, and was Fortune’s top rated employer for so many years, it finally opted out of the list. Still offering no food, assigned seating, TVs or other perks, Southwest proves that being a low coast provider can be fun, welcoming, and after all these years and with other options, the more desired choice.
Zappos: While dozens of book on successful retailing practices preach the people – service – profits hierarchy of principals, few companies can commit. But show us a successful retailer like Zappos (now owned by Amazon), and we’ll show you a company that puts its people first, or has a disproportionate commitment to preparing its people to provide an unbeatable experience. Specifically, Zappos provides up to seven weeks of associate training on how to make the customer happy: “Insane” and “fanatical” about how it treats customers, and like Nordstrom’s, Zappos never agues about returns, and accordingly has a hugely loyal customer base.
Costco: The concept of bulk-packaged goods in a warehouse would sound exclusively like a one-sided value proposition, but Costco has truly transcended that model as the brand is now known for sampling, experience, and incredible loyalty: More than 60 million members and renewal rate greater than 87 percent. While growing their private label Kirkland brand (named after its founding hometown of Kirkland, Washington), Costco is also spending $1,3 billion in new and renovated stores. And although this great American brand has “beer drinker” segment written all of it, Costco is America’s number one wine retailer, with deep expertise and a truly entrepreneurial culture.
Amazon: Dominating and only getting stronger: More than their peerless regression model that allows them to continue to customize the user experience, their compression of media as product mix, now down top 40%, means more people signing up for Amazon Prime and ordering dog food, cameras, cereal, eye wash, and everything else that allows Amazon to take 10% of all ecommerce dollars off the table for everyone else. Add wish lists, instant video, and the Kindle, and plans to probably open their first brick & mortar this year, and Jeff Bezos continues to prove that Amazon is one of the most world’s most visionary companies.
Dollar General/Dollar Tree/Family Dollar: Just as Walmart continues to push value over price (Save Money. Live Better. v. Always Low Prices), these three exploding retail plays solidify the dollar store economy: Honoring the mother of all table stakes, convenience, they take the closest 7-10k Sq. Ft. to a Walmart or Target and steal share in a hurry. Surprise: 22% of their customers earn $70k per year or more, and it’s their fastest growing segment. Look for more than 2,000 additional dollar stores in the US in 2012 – that’s easily 15,000 new jobs, as the march of the dollars stores continues to roll.
Papa John’s: The world didn’t need another pizza chain when John Schnatter opened his first restaurant in Louisville in 1984, but in the past ten years they’ve gone from owning 1.9% of the market to 7.9% despite being out spent by at least 3:1 by Domino’s and Pizza Hut and with only 20% of the footprint. From a loyalty program that in 28 months went from having 50 thousand members to 4 million today – customers who order more and spend more – Papa John’s amazing success speaks to world-class marketing to match peerless merchandising. At this point, very few industry analysts doubt that Papa John’s will eventually be America’s number one pizza maker.
Disney Parks: Two of the top ten retailers use a variation of pixy dust as secret sauce. In this case, it’s beyond magic or characters or thrills: In a world where retailers strive for operational excellence, Disney often achieves operation flawlessness. Cast members perfectly on cue, world’s class incremental lift from licensed merchandise, and operations that seamlessly hide the logistical challenges of handling more than 130,000 visitors a day in Orlando’s four parks alone. Disney reminds us that sometimes disruption doesn’t work, and a winning formula means one foot planted firmly in the past and the other in Neverland.
Ollivanders: Is a fictional retailer still a retailer? Let’s put it this way… the money they collect at this (barely) 1,500 sq.ft. one off is very real indeed. Sure, Ollivanders is located in the very target rich acreage known as Universal’s Wizzarding World of Harry Potter, but still, the store conservatively generates close to $20,000 per square foot. Moreover, it’s the margins that make us believe in wizards: Ollivanders is basically selling sticks of wood, a.k.a. magic wands for between $40 and $70 a pop. Not every store is built on magic and folklore or cross-generational best selling books, but the power of an Ollivanders or even a Disney must serve to remind us that every great brand tells a story