May/June 2007
A Report on the Current State of Retail
produced by
In theory, intelligent strategy and beautiful design should result in a
retail success. So how did Forth & Towne miss? It answered the
fashion needs of the vast and lucrative women-over-35 group with a
new grown-up brand wrapped in a sophisticated design from David
Rockwell. Yet Gap’s attempt to get its share of the healthy sales being
enjoyed by stores like Chico’s and Eileen Fisher failed to strike gold.
Instead, 18 months after they opened their doors to an
eager and underserved audience, all 19 Forth & Towne
stores will close, deemed unworthy of further investment
by their parent company. The Magic of
“It’s something of a myth that if you work on strategy,
you will be guaranteed the right answer, or the perfect
concept,” says Bruce Dybvad, Design Forum’s president.
Strategy and Design
“Retail brand strategy is multi-faceted. It includes the
product of course, and all the customer touch points. If
one of those aspects doesn’t deliver, the rest can’t make up for it.”
According to the retail analyst post-mortem, Forth & Towne apparel
decisions were made by Gen Xers who didn’t understand what
Boomer women wanted. Further, the assortment made it more like a
department store than a boutique. And their messaging was age
specific, a turn-off to the group they were trying to attract. The design
and service component were strategically right, but it wasn’t enough.
There was no magic.
“The experiential facet is where the store delivers on the brand
promise. Strategy, the way we define it, engages business opportunity
with shopper insight and appends all that knowledge to a physical
solution. It doesn’t guarantee magic, but it does give you a much
greater possibility of creating a magnetic concept that fills a vacant
market space. And then, only if strategy and design share a process
that engages their thinking in a fluid, dynamic, related way.”
Executed the way it was, Forth & Towne didn’t connect with the
various life stages of this demographic, which is a great challenge for
every retailer because of its breadth and the variety of life styles within
it. Older women also buy less impulsively and less frequently than the
younger shoppers catered to by Gap and Old Navy. In the end, retail
experts accused Gap of seeing only a statistic, the growth potential of
the target market. In their rush for gold, they didn’t gather the insight
required for a great retail experience.
Of course, many of the greatest store ideas have been born simply
from a smart observation and a passion for a product or service—
without the use of a battery of consumer tests, authentication, and an
army of consultants. Target wanted to make discount shopping as
much fun as shopping in a stylish department store. Starbucks wanted
to romance the neighborhood coffee house. At the end of the day, they
are simple, well-executed, insightful ideas running on their own
unique dynamic.
The problem is, great ideas turn into great big companies coining huge
amounts of revenue that must show year-over-year sales improvement
through growth. That’s where strategy and design have a role to play.
“Howard Shultz is right to be worried that Starbuck’s foray into
through-put has removed much of the romance and theatre from the
experience,” says Dybvad. “He must now be unbelievably careful that
they don’t jeopardize the original idea in their lust for growth. This is a
stage in the lifecycle of
retail where, if you’re not
cautious, you can lose your
soul. Things start showing
up in the store that don’t
make sense.
“Here is where a really
outstanding professional
team that attaches strategy and design together can help guide solutions
that keep the brand in its natural space. The retailer’s energy—in the
context of shopper insight, brand and profitability—must be channeled to
constantly align against the brand foundation to propel the chain and
maintain its soul. That’s the magic of strategy and design. It’s the
navigational star.”
Dave & Buster’s restaurant and gaming concept is another great idea,
born 25 years ago when its namesakes merged an arcade with a
restaurant in a 40,000-square-foot Dallas warehouse. The private equity
firm that now owns it knew Dave & Buster’s offered a great experience,
but weren’t sure why. They needed to know before evolving the brand
for growth. Their research revealed a surprise. Games alone were not the
draw with key segments. The appeal of Dave & Buster’s is the
experience that comes from the interaction of all their offerings—food,
drink, good service, sports, corporate events and games for families and
business people. Nothing should be cut, because the whole is greater
than the sum of the parts.
“A smart retailer will take that kind of insight and design an environment
that will physically do what customers want it to do,” says Dybvad.
Analogous to a mid-life crisis, mature retailers under pressure to create
additional revenue may find themselves chasing too many poorly-fit
initiatives and failing to manage the outcome of their efforts. Executive
teams making day-to-day decisions may lose the spark of passion. A
once-vibrant retail experience can begin to feel tired. Carefully
considered strategy, says Dybvad, can provide a clarifying “moment of
perspective” on what the company is trying to solve for.
“Within strategy, there are a lot of factors that tell you where you should
spend on the experience relative to what you get credit for,” says
Dybvad. “You get an idea of how much total investment should be made
in the facility, and the hierarchical order of what’s important to the
customer. Those insights help deliver really critical knowledge to
designers as they put together a concept. It’s not that the strategic
component guarantees the creative answer. It identifies the area to work
the problem.”
It’s too late for Forth & Towne, but not for the world’s largest specialty
coffee retailer. Maybe Starbucks will decide to lose the super-automatic
espresso machines and save its soul.
 May/June 2007

Chairman’s Commentary

Getting Younger
Originally for this issue’s commentary, I was
going to talk about the different things
Generation Y is doing. But the way I see it,
we’re all doing the same things. Just for
different reasons.
Businesses are increasingly aware that in order
to survive the rapid pace of change wrought by
the Internet, we need to adopt the optimism of
youth: being open by allowing others access to
our content online, peering within communities
rather than being controlled by traditional
hierarchies, sharing ideas and success stories
so they can be valued by a wider audience, and
acting globally by collaborating with friends outside our own
geographical area. Add to that list, the insatiable need for newness
and coolness and you begin to sound like a retailer.
My point is, we are all beginning to think about adopting the same
principles that youth aged 16-27 operate on. Witness their fearless
use of social media, with an emphasis on fearless. Interestingly,
the other major population group, the age 43-61 Baby Boom, is
moving into the second half of life, tiring of structure and looking
for something fresh and new, with an emerging trend that looks
like a return to youthful idealism. Not that they’re heading to
MySpace in droves. But they are certainly blogging like crazy,
writing and editing for Wikipedia—and as they leave the workforce,
will most likely take on mentoring roles via social media to
transmit their knowledge and experience.
Being open, peering, sharing and acting globally are all principles
businesses need to adopt for the digital economy. If you want to
know more about how mass collaboration changes everything, I
suggest you read Wikinomics, by Don Tapscott and Anthony D.
Williams. Although the book is a little heavy with the melodrama
(as in, collaborate or be doomed), it manages to be highly thought-
provoking and persuasive. It’ll have you thinking twice about
applying old business techniques to your growth initiatives. Yet
although the authors are right about the limitless knowledge
available on the Internet giving us all the power to innovate,
innovation won’t get any easier.
percentages. But the Internet has made it much easier to influence
and to get people to participate. And more creative people
working together on innovation will certainly increase the odds
of achieving it.
Granted, I understand that of all the things keeping CEOs up at
night, it’s not mass collaboration. It’s more like cost reduction
and risk management. At Design Forum, however, we’re already
hip-deep in collaborative waters. Today, virtually every project we
work on requires collaboration with another agency, in many cases
the retailer’s advertising agency or private equity firm. We’ve
become adept at switching leads and learning to play different
roles at different times in the relationship. As the future unfolds,
we’re certain to find more opportunities for creative interaction
that will enrich our ability to serve clients.
Changes have been at work for many years now—the microprocessor
turns 50 in 2008—but they have just kicked into high gear.
Consumers want more change more often. The necessity of rapid
development to compete requires many minds, inside and outside
of your company.
The life of a retail trend used to have seven distinct steps between
emergence and decline. The cycle has been compressed by 20
percent, and will continue to compress, under pressure to
introduce new things quickly. The value of newness is so critical,
scores of trendspotters are calling things trends that are really just
influences. Rushing them through their normal stages and onto the
sales floor reduces their potential and their longevity. That’s the
new paradigm for the retail business. It’s reflective of life today,
regardless of age.
The forces that shape new strategies to accommodate change
require the courage to open up. Exciting ideas, inspiration and
experience are waiting everywhere, not just the board room.
It’s the age of participation built on relationships and conversations.
The world is getting younger. I like that.
Thoughtfully,

As of now, only the tiniest fraction of social media users are

generating content. Most people only watch. That’s human nature, D. Lee Carpenter
and the only real change will probably be in numbers, not Chairman & CEO

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 GuestFeature
So how do we nurture our ideas so they’ll
succeed in the world? Many of us struggle
with how to communicate ideas effectively,
how to get our ideas to make a difference. A
manager makes a speech unveiling a new
strategy as the staffers nod their heads
enthusiastically, and the next day the front-
line employees are observed cheerfully
implementing the old one. Our interest is in
how effective ideas are constructed—what
makes some ideas stick and others disappear.
There are two steps in making your ideas
sticky—Step 1 is to find the core, and Step 2
is to translate the core using the six SUCCESs
principles [Simplicity, Unexpectedness,
Concreteness, Credibility, Emotions, Stories].
The first step in unpacking these ideas is to
explore why Southwest Airlines deliberately
ignores the food preferences of its customers.
Finding the core
The reasons for Southwest’s success could
(and do) fill up books, but perhaps the single
greatest factor in the company’s success is its
dogged focus on reducing costs. For this effort
to succeed, the company must coordinate
thousands of employees, ranging from
marketers to baggage handlers. Southwest has
a core that helps to guide this coordination.
Vegas? Because if it doesn’t help us become
the unchallenged low-fare airline, we’re not
serving any damn chicken salad.’”
Now the core idea –“THE low-fare airline”—
isn’t the whole story, of course. Southwest is
known as a great place to work, which is
surprising. It’s not supposed to be fun to work
for penny-pinchers. It’s hard to imagine Wal-
Mart employees giggling their way through
the workday.
Southwest’s employees know that it’s okay to
have fun so long as it doesn’t jeopardize the
company’s status as THE low-fare airline. A Chip Heath is a professor of organiza-
new employee can easily put these ideas tional behavior in the Graduate School
together to realize how to act in unscripted of Business at Stanford University.
situations. For instance, is it all right to joke
about a flight attendant’s birthday over the P. Dan Heath is a consultant at Duke
A.? Sure. Is it equally okay to throw confetti Corporate Education. A former
in her honor? Probably not—the extra work researcher at Harvard Business
for cleanup means higher fares. Clearly there School, he is a cofounder of
are additional values (customer comfort, Thinkwell, an innovative new media
safety ratings) that refine Southwest’s core
textbook company.
value of economy. But a well-thought-out
simple idea can be amazingly powerful in www.madetostick.com
shaping behavior.
Principle 5: Emotions
Translating the core How do we get people to care about our
As we pored over hundreds of sticky ideas, ideas? We make them feel something. We are
we saw, over and over, the same six principles wired to feel things for people, not for

Why Some
at work. abstractions. Sometimes the hard part is
by Chip Heath & Dan Heath Principle 1: Simplicity finding the right emotion to harness.

Ideas Survive
To strip an idea down to its core, Principle 6: Stories
we must be masters of exclusion. How do we get people to act on our ideas? We
We must relentlessly prioritize. We tell stories. Hearing stories acts as a kind of

and Others Die

Herb Kelleher [the longest-serving CEO of
Southwest] once told someone, “I can teach
you the secret to running this airline in thirty
seconds. This is it: We are THE low-fare
airline. Once you understand that fact, you
can make any decision about this company’s
future as well as I can.
“Here’s an example,” he said. “Tracy from
marketing comes into your office. She says
her surveys indicate that the passengers might
enjoy a light entrée on the Houston to Las
Vegas flight. All we offer is peanuts, and she
thinks a nice chicken Caesar salad would be
popular. What do you say?”
The person stammered for a moment, so
Kelleher responded: “You say, ‘Tracy, will
adding that chicken Caesar salad make us
THE low-fare airline from Houston to Las
must create ideas that are both mental flight simulator, preparing us to
simple and profound.
Principle 2: Unexpectedness
How do we get our audience to pay
attention to our ideas and how do we maintain
their interest when we need time
to get the ideas across? For our idea to endure
we must generate interest and curiosity.
Principle 3: Concreteness
How do we make our ideas clear? We must
explain our ideas in terms of human actions,
in terms of sensory information. Naturally
sticky ideas are full of concrete images
because our brains are wired to remember
concrete data.
Principle 4: Credibility
How do we make people believe our ideas?
Sticky ideas have to carry their own
credentials. We need ways to help people test
our ideas for themselves. “Ask yourself if you
are better off today than you were four
years ago.”
respond more quickly and effectively.
The SUCCESs checklist is an ideal tool for
dealing with communication problems. Herb
Kelleher could tell a flight attendant that her
goal is to “maximize shareholder value.” Is
this idea simple? Yes, but not useful. Is it
unexpected? No. Concrete? No. Credible?
Only in the sense that its coming from the
mouth of the CEO. Emotional? Um, no. A
story? No. The problem with “maximize
shareholder value,” despite its accuracy, is
that it doesn’t help the flight attendant decide
whether to serve chicken salad. Our hope is
that you’ll apply these traits to your
own ideas.
A Report on the Current State of Retail
produced by