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ULTA Beauty. High Performance Retailing Mirror

ULTA interior

  • Founded in 1990, it is in the stock exchange and currently has almost 1,200 of its own stores, all of them in the USA, with an average area of 1,000 sqm. They have scrupulously fulfilled their plans to open 100 stores / year in the last five years. The estimated optimal potential for Usa is a total of 1,700 stores. Further, you will have to start an expansion in other geographic markets.
  • All its stores have a hairdressing salon (100 sqm) with more than 10,000 people working only in this service.
  • They are especially strong in cosmetics (above 50% of their sales). They offer an assortment with 25,000 references, 500 brands and top 10 suppliers represent 2/3 of the business. They also have their own brands and some external brands such as Kylie – digital natives – exclusive for their physical stores.
  • Its authentic machine room is its loyalty program with 32 million members and they contribute 95% of its sales.
  • With a strong omnichannel vocation, ecommerce already accounts for more than 11% of its sales and those customers who use more than one channel have an x3 expense higher than what they only buy in physical stores.

 

ULTA Exterior

Talking numbers

ULTA, as the leading chain (sales of USD 6,716 million) in the USA specialized in perfumery and cosmetics, has a discrete business card and the analysis of its results generates a special satisfaction when it is verified how a company of that size has doubled its turnover in just 5 years in an organic way and with an operational efficiency without frights or “big headlines”ULAT Evolution 5 yearsULTA-sales-evolutionULTA-Income-Evolution-

 

Operating model with proven track record of real benefits

  • The growth in sales has been achieved maintaining the solid profits (before taxes) of 13% on sales. Vital constant of this business and in clear contrast to the “Unicorn” business models that occupy the main comments in the current economic news.
  • Traditional retail KPIs such as sales productivity per meter (USD 6,000 / m2), inventory turnover (x5 per year), LFL growth to comparable surface … coexist with selective investment initiatives in artificial intelligence and virtual reality start-ups that are incorporated Gradual way in business.

And all this is being achieved with a board of directors made up of 11 members with an average age of 60 years. Experience, good work and a culture open to innovations that work

 

ULTA-attributes-EN-

Mhe Services

Retail Strategy and Operations >>

 ULTA vs Sephora

  • There is strong competition in this sector in the different existing channels including department stores, consumer generalist and specialists such as Sephora.
  • The boundaries between the mass market segment and the selective “Prestige” have become blurred and in the case of ULTA customers, ¾ they are both mass market and Prestige.
  • The cornerstone of ULTA’s progress has been the continuous improvement and upgrade of the half-accessible brands to match them in their store setting and attention with the selective channel.
  • With a wide range of age / socio-economic level of its customers there is a gradual convergence between the two leading operators ULTA-Sephora

ULTA Brands

ULTA ¡They have a Plan… and know how to execute it!

Always with changes not abrupt but that occur and are executed with a clear purpose.
Sephora and ULTA, two different paths that converge over the years. Nike and Adidas, Sephora and ULTA … the binomials work.
Health and beauty is clearly a mirror where to look for other retail sectors

¡High performance and profits do not go out of style!

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Casper. Native Digital Vertical Brand. Direct to Consumer

Improve customer experience as a starting point

  • Casper, with only 5 years of existence in the USA has generated a new segment in the rest sector selling mattresses online and delivering them at home in a box.
  • Its starting point was to improve a mediocre shopping experience on the part of the customer that compared it with the purchase of a second-hand car.
  • Getting a company valuation over USD 1 billion at this time has not been an easy task.
  • Among the investors in this Unicorn company are profiles as diverse as Private Equity, the TARGET retail chain and some famous people such as Leonardo di Caprio.
  • Since its start, Casper has developed a very simple and easy to communicate assortment, fleeing the crowd of alternatives available in the sector of materials / specifications / measures similar but different.
  • The price range starts at USD 300 up to USD 2,750.
  • It has its own production.
  • It has always led to the testing of its products (100 nights) and facilitated its possible return at no cost.

Casper Interior

Strong sales growth but still losses

Casper’s sales went from USD 373 million in 2018 to an estimate of more than USD 550 million in 2019. Still in losses (USD 64 million in 2018) has consumed the usual 5-year grace period granted to Unicorn companies.
It is currently in the expansion phase in new markets such as Canada, UK, Germany and Asia.Attributes-Casper

 

Numerous competitors replicating the Casper model

  • Casper is no longer alone in this segment. Among its most direct competitors are Brands like Tuft & Needle, Purple, Nectar Sleep, Leesa Sleep, Allswell (Walmart), Evesleep (UK), Simba (UK) … There is a substantial increase in revenue but it is still a business model With operating losses. Most of these brands, being digital natives, already have selective distribution agreements through some existing retail chain (home specialists, department stores …).
  • The downside is in the difficulties encountered by more traditional specialist chains such as Mattress Firm that had to close more than 700 physical stores in the USA in 2018.

 

Retail Strategy and Operations Specialists

MHE Services >>

 

Differentiation and creativity

Creativity, humour and innovation have always been present in Casper’s marketing. They highlight co branding campaigns such as the one carried out for the business class of the American airlines or the successful campaign based on hieroglyphs for the NYC Metro network.

Amercian-airlines-and-Casper-collaboration

casper-subway-puzzles

Retail Approach

Native digital brand, opened its first own store in 2018 in NYC. It currently has about twenty stores of its own and are present with corners / linear in more than 1,000 Target stores in the USA.
Its main channel is its own Online and they also sell through Amazon.

Casper y Target

Elements in common of the “DNVB” (Digital Native Vertical Brands)

The new Direct Consumer Marks (DTC) tend to have a number of common characteristics:

  • Digital natives
  • Focus on the relationship with your customers. Obsessed in the Customer experience
  • Disruptive in its sector. They generate a new competitive environment in their segment
  • Intensive use of social media
  • They use the content as a differentiating element of their Marketing and with a clear Story to tell
  • Own retail very limited
  • Agreements for selective implementation in other existing retail chains

The performance results also tend to converge:

  • Strong growth of their  income (35-50% per year)
  • High customer acquisition costs (CAC)
  • Significant operating losses in the first 4-5 years
  • Difficulties when they start to go public (IPO)

Even if they are not easily consolidated as a viable business model, they have a strong impact on their more traditional operators who are incorporating some of their characteristics spurred by a consumer, who logically embraces the new commercial approach without entering those “little ones” profitability details.

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Unicorn with a contagious smile

Smile direct club store front

Breaking Moulds

The health sector is not inmune to digital transformation and improved customer experience. Smile Direct Club has identified as an opportunity to facilitate a smile with well-aligned dentures without having to go through the brackets, frequent visits to the orthodontist and with a 60% smaller budget.

In just 3 years it has already  more than 300 stores of its own in Usa, and it has recently started (3T 2019) its expansion in Canada, UK and Australia.

It makes the experience more accessible. The customer chooses how and where to start it: at home or in one of its stores

The innovation focuses on making an orthodontic treatment easier and more accessible by means of invisible moulds, made using 3D printers that the customer changes without having to go to the physical consultation of the specialist. Using an initial kit that is received at home or on a visit to its stores, the treatment is initiated and it is monitor by the specialists remotely used an app on the mobile. The duration of treatment has been reduced by half (6-8 months) of the traditional and cost by 60% less.

doctor-directed-SDc-Rempte-controlled

Sales growth and astronomical losses

Belonging to the “unicorns” league (start-up with a valuation of over USD 1 billion) listed since this September 2019 on the Nasdaq. As appropriate, it has been doubling annually its income and losses over the past 3 years. Customer experience at the stroke of a talonary.

Sales-SMD-compressor

losses-sdc-compressor

 

Specialists in Strategy and Retail Operations

MHE >>

 

Initial challenges. Their main supplier and corporativism of specialists

Not everything has been pink in their way. After a frustrated initial collaboration with its Invisalign supplier, it has currently  the largest existing global plant of moulds made using HP 3D printers (produces 20 million moulds per year).

The main challenge it faces now is the corporate struggle undertaken by the collectives of orthodontic professionals who are trying to stop their expansion.

Lab-ed

Extreme Omnichannel

Its website, with more than 5 million visits, feeds its store network  in shopping centers and urban centers. It also has a fleet of travelling buses to bring the experience to new places before the opening of new shops.The channel with the highest growth is the progressive opening of up to 1,500 “implants”  corners with reduced dimensions within CVS pharmacies/drugstores in the USA.

The management team has already extensive experience in this type of situation. They have previously developed similar businesses in:

  • Contact Lenses (1-800 contacts)
  • Diabetes Care (Simplex Health)
  • Hearing Aids (Hearing Planet)

standard-bus

Retail Implications

In all these cases they have applied the same recipe:

  • Simplification of product/service range with the implementation of technological innovation
  • Competitive priced
  • Elimination of friction points in the customer experience
  • Greater self-control by the customerl of the process Omnichannel
  • Selective use of a physical network of stores, own and third parties

With an initial overvaluation (like good Unicorn it is) and downward stock exchange quotation , Smile Direct Club is an example of the current transformation taking place in Retail.

There are no exceptions. Which subsector will be next one?

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Unicorn at full speed. Growth by all means.

“TOGETHER WE GO FAR”peloton1-min

 Unicorn – Extreme Growth

PELOTON, belongs to that selective unicorn company league with an innovative business model in the fitness sector, based exclusively on growth expectations, with no track record of profitability and with a valuation of more than $1 billion, in recent IPO process.

It started in the USA in 2014 selling its first connected premium exercise bike and currently provides almost 1,000 different sessions per month online with the best available instructors.

 

Addictive Satisfaction

It provides a rewarding experience to its half a million subscribers who after paying a minimum of 2,000 euros for their connected bike, pay about 39€ per month to be able to enjoy at home this innovative cocktail of Fitness + Media + Technology.

With 8-13 sessions per month and a low churn ratio of 0.65% per month, they have managed to articulate a healthy “addictive” experience.

Its Direct to Customer model mainly online, also has its own retail limited network (75 stores with a wide range of formats such as the 30-sqm micro store or the 150-200sqm Studio where customers can try and experience the products and fitness sessions.

Explosive Income Growth

Total revenue has quadrupled in the past two years, with a strong investment in marketing/sales (35% on total sales) and an R&D effort of 6% of total sales.

Its growth expectations are based on the international expansion (recently it has begun its activities in Canada, Germany and the UK) and the extension to other product areas such as yoga/mindfulness.

In addition to its core revenue from product sales, it is clearly being supplemented by its monthly subscriptions, which already account for 20% of the total with strong growth over the past two years.sales peloton-minSales Evolution Mix Peloton English-min

 

Retail Strategy and Operations Specialists

MHE >>

 

Strong Losses

The results line reflects heavy losses due to the high cost of acquiring new customers and the main focus on growth at all costs in the hope of achieving a higher volume that balances the current cost structure. There is a big question mark of financial feasibility at midterm horizon.

This financial model is an exclusive privilege as a Unicorn company that does not apply to other conventional companies (which must provide dividends) and that is justified exclusively by their high growth expectations.Peloton Losses-min

 

Digital Transformation

The fitness sector is not being at all oblivious to digital transformation:

  • Digital platforms grouping hundreds of fitness centre of various brands and formats: e.g. Gympass, Andjoy, Fitpal
  • Transformation of the traditional gym business towards specialization/segmentation: e.g. Equinox
  • Brands of connected equipment similar to PELOTON: e.g. SoulCycle, Echelon, Techno Gym …

Try a claass with us Peloton-min

Retail Implications

It is clear that Peloton, disruptive, with its revenue/cost structure and lack of business profitability, to date, can not be applied to the conventional Retail model.

Spite of all this, we can identify a number of elements and features of the new Unicorn businesses that sooner rather than later, will be selectively adopted by Retail and Brands:

  • Direct to the Customer
  • Focus on mix of products and services
  • Use of innovative technology to customize and provide “on demand” the product/customer service
  • Subscription. Recurring income
  • Extreme omnichannel. Online and physical
  • Clear adaptation of physical retail formats based on the different roles they have (e.g. stores from 30 to 200sqm). Limited footprint.
  • Addictive and satisfying experiences in communities

Yoga Peloton-min

 

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Patagonia, is a symbol as an innovative brand and pioneer in the proactive environment protection . With more than 45 years behind it, it is the ultimate exponent of a company that assumes as its authentic mission its own the value of the durable, “Patagonia is in business to save our home planet”.

Impact Environment-patagonia

Far from being a passing fad, Patagonia has dedicated, for more than fifteen years, 1% of its sales to finance and promote initiatives directly aimed at reducing the human impact on the environment.

Through its Patagonia Works entity, it selects, organises and develops all kinds of activities to reduce the impact on the environment with professionalism, rigor and at the same time, proximity and with activism, sometimes not complacent with the established status.

It develops more than 2,500 activities a year with strong involvement of local communities.

 

Outdoor Segment

It is not by chance that the founder of this company specialised in Outdoor is passionate about mountaineering. The same is true of other companies such as Mont Bell (Japan) and Rei (US) where the business’s precursors are in themselves, genuine passionate about free- to- air activity and develop their businesses with an exquisite proactive defence of the environment.store front-patagonia

With strong larger competitors like Columbia, North Face, Patagonia has made progress in revenue and profitability. Its positioning with a price level slightly higher than its two main rivals has been no obstacle to continue to count on the loyalty of its costumers.

It hasss a small network of about 50 own stores, direct ecommerce and maintain the wholesale channel as its main distribution route.PVP medio-ingles-min

 

Amplitud Opciones ingles-min

 

Mhe works for major chains and brands improving retail strategy and operations 

Retail Operations

 

Product Assortment

Each product they incorporate is audited in detail to ensure that it is designed and produced with the least impact and that it fulfils, in a lasting way, the functions to which it is intended.

The progressive use of recycled materials for its products is a reality.

material recliclado ingles-min

 

In addition, Patagonia proactively promotes the arrangement of those garments that for their daily use need a repair so that they continue to be used, either by its original customer or through its “Worn Wear” service by another customer thus giving a second life to the garments.

Repairs are carried out through its Central Specialised Center (Reno), as inside its shops and flying workshops with planned itineraries.

Patagonia WearWorn-patagonia

 

Given the importance of food, Patagonia has introduced a newline of business (Provisions) to offer an environmentally friendly assortment specially designed for use in outdoor activities.

 

Patagonia Provisions Food-patagonia

 

Innovative initiatives for its employees

The working environment for its employees is consistent with the values it pursues and has a number of innovative initiatives that have managed to provide the lowest turnover rates in its USA sector:

  • 100% of women with maternal leave return to work
  • Own facilities and services for the care of younger children
  • Flexibility to enjoy with 21 weekends (three days) a year to be able to develop free-to-air activities with their families
  • 1.5 million km reduction in car journeys by its employees

Transparency and best practices for the outside

Patagonia has a clear policy of transparency and shares its best practices with other companies, including competitors, to the extent that it results in less impact on the environment. Altruism well understood.

Key findings

  • Genuine matters
  • Not always happy with the current situation
  • Innovating always chasing the durable. A certain taste of RETRO
  • A well-understood activism to defend values is not against  profitable commercial business and in fact facilitates a strong bond with your customers.

We need more “Patagonias” in other sectors!

 

 

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

Flagship Store in Madrid. Serrano Street

JW Madrid Serrano Brand Retailing Mhe

Since last November, Serrano Street in Madrid has the only European Flagship store of the Johnnie Walker brand. This wasn’t his first attempt. Previously 4 very restricted spaces were tested in different international airports supporting a greater premium character for the brand.
In this new space they are cool to face challenges that are common to most brands:

  • Experience
  • Interactivity
  • Customization
  • Cult of its tradition and legend (200 years)
  • Themed with the new customer context (e.g. Game of Thrones)

store madrid-min (2)Belonging to the Diageo group, JW is one of 200 different brands (including Guinness) that the group manages with more than 13 billion euros of sales across 180 countries. With a strong commitment to marketing (15% of the value of its sales), it has decided to spend 150 million euros for three years to develop a series of physical centers linked to its distilleries thus fostering an interesting customer-facing experience integrated with leisure/tourism.
A network of 12 distilleries in Scotland are the first to be incorporated. The ultimate exponent is the newly approved project for Edinburgh that will incorporate the lessons learned into its first Serrano store.

JW Interior Madrid. Mhe

Brand Retailing Mhe

It’s not just in the physical store grounds that JW is innovating. According to a recent study by Gartner L2 (July 2019), Johnnie Walker is the alcohol brand with the highest degree of innovation in digital initiatives.
Iniciativas digitales Branding retail

Mhe works for major chains and brands improving retail strategy and operations

Retail Strategy

The commitment of the Brands to be present in physical stores has been materialised in the different sectors with unequal success and in a variety of concepts:

  • Traditional flagship shop
  • Maximum exponent of omnichannel/technological experience
  • Ephemeral pop-up units
  • Advanced Showroom
  • Integration with your production sites
  • Implants in third-party environments…

Other brands as diverse as Dyson, Windows, Hershey’s, Hyundai, Kellogs or Samsung are also testing and developing their activity in Brand Retailing with disparate results.

Dyson Store Branding retail Mhe

Tradition and innovation are not incompatible. Johnnie Walker manages to get excited in Serrano Street and at the same time sell competitively on the shelves of the Mercadona supermarket round the corner.
juego de tronos JW Brand Retailing

With the brand connecting and … on the shelves selling !

More info: carlos.dominguez@mheconsumer.com

www.mheconsumer.com

 

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