Credit: National Retail Federation.
Retailers have it good right now. According to the latest data from the Commerce Department, U.S. retail sales improved 0.6% in July -- or 0.4% if you exclude auto sales. The results build on better-than-expected performance in both May and June, a sign that consumers are in a spending mood heading into the all-important holiday shopping season.
And yet, the best retailers never settle. If anything, they invest in good times to prepare for the inevitable rough patches. Who does it best? We asked three Fool contributors to name their favorite innovators. Read on to see if you agree.
Keith Noonan (Amazon Prime): Amazon's (AMZN -1.35%) Prime platform stands as one of the most innovative and disruptive forces in retail, and the value that it offers subscribers is only increasing. While 2014 saw the company raise the annual subscription price from $79 to $99, it's backing up the move with key new content and features that are likely to drive interest in the service, and further strengthen its online marketplace.
One aspect of Prime that's getting seriously beefed up is the Prime Instant Video streaming service. While the video platform already offers a selection of movies that rivals what's offered on Netflix, it's making a serious push to rival the streaming leader in original content with the signing of former Top Gear hosts Jeremy Clarkson, James May, and Richard Hammond for a new, car-focused program.
The budget for the 36-episode car series has reportedly been set at $250 million, and with some estimates suggesting that Top Gear has a worldwide audience of 350 million viewers, there's a good chance that Amazon's new show will bump Prime subscription numbers and create the opportunity for more retail sales. It's also not a one-off investment for the company, with a slate of new original shows in development, and deals with networks including Time Warner's HBO beefing up the premium feel of the platform.
Prime is also attractively priced. Consider that it costs roughly $96 for a year of Netflix streaming, or just $3 less than a year of Prime, yet Amazon's platform also delivers streaming music and free two-day shipping on purchases from Amazon.com.
Given everything that's included in the Prime package, it's not surprising that the service has generated losses for Amazon; but the company is using the innovative features of its subscription package to drive participation in its online ecosystem and further its position in retail.
Asit Sharma (Whole Foods): In the space of a couple of years, Whole Foods Market (WFM) has quietly, but dramatically, stepped up its interest in using technology to connect with customers and boost sales. The company was one of the first major retailers to adopt Apple Pay last year. It's also been an early champion of grocery delivery service Instacart.
While other grocers expressed initial skepticism over the one-hour delivery start-up, Whole Foods plunged into a partnership with Instacart late last year, launching in 15 cities nationwide. At last count, WFM is enjoying $1.5 million in weekly sales from the relationship. Better yet, the average Instacart "basket," or purchase size, is 2.5 times greater than a typical in-store checkout.
Earlier this summer, Whole Food's management indicated that it would begin to roll out its "Values Matter" marketing and advertising campaign through digital venues such as the company's mobile app. The campaign will link to Whole Foods' newsletter and its loyalty program -- which is currently being test marketed -- with the goal of increasing the conversion rate of its advertising.
The most intriguing technology innovation from Whole Foods is yet to come, however, and shrouded in mystery. Next year, the company will open the first of its "365" stores, a streamlined brand aimed at millennial shoppers. Co-CEO John Mackey recently promised that 365 will be "a streamlined, hip, cool, technology-oriented store unlike any store anybody has ever seen before." While executives haven't yet provided clues as to what this means, we can assume that, in short order, Whole Foods' new embrace of technology will be much more visible, and potentially more profitable, than it is today.
Tim Beyers (Target): Thanks to social media and mobile technology, retailers have more ways than ever to engage customers. Few have been smarter about using these tools than Target (TGT -0.67%).
For Halloween last year, the retailer created an Instagram campaign that simulated the "trick-or-treat" experience using a collection of taggable images and custom-made accounts. Target also leveraged a unique service called "Like2Buy" in order to capture sales from the most engaged Instagram followers, Ad Age reports.
This year's campaign could be even bigger, and for good reason. Two months ago, Instagram unveiled plans to make it easier to solicit a direct response from image posts. That includes a "shop" button on images that hawk products. Expect Target to take advantage, especially since research shows that Instagram is 11.2 times better than Facebook at engaging users.
For a retailer that's been historically handcuffed into seasonal shopping patterns and the tyranny of physical location, quick-hitting engagement via Instagram should be a welcome relief.
