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What's Your EQ? How the Retail Business Became the Emotion Business … Are you Ready?
by Wendy Liebmann


Speech to the Retail Advertising Conference, Chicago, IL - February 2003

After what may have been one of the most devastating holiday shopping seasons in recent American history, it seems only appropriate that we take a deep breath, dust off our laurels (which clearly we won't be resting on any time soon…), and begin to rethink the way we do business at retail in this country.

After all, when American consumers shop at Christmas time the same way they shop any other time of the year, the rules have changed. When American consumers willingly get up at 5 AM the Friday after Thanksgiving to shop for a $19.79 television or an $89.99 DVD player -- then they virtually stop shopping until December 26 -- we know the rules have changed.

When American shoppers don't care whether the gifts are under the tree on December 25, when they would rather wait until December 26 to shop when prices are even better, the rules have obviously changed. And so, we must rethink the way we do business at retail, because evidently Virginia, there is no Father Christmas (or if there is, he's waiting for the next reindeer sale).

That's what I am going to talk about this morning -- while wounds are still fresh and blood pressure still high, when we cannot ignore the facts of the matter.

When Tom and his group invited me to speak at this meeting, I was told the focus was Opportunity, Knowledge and Passion. It was pretty clear to me that buried in those three words was the clue to what's the matter with retail today.

Knowledge is essential, Opportunity helpful. But Passion -- that's the missing link.

The fact of the matter is that passion seems to have disappeared from our retail mindset. Passion is now translated solely into ever multiplying sales signs. Passion now comes in our delight (or relief) that our bottom line looks better than our top line -- and we think that's a long-term marketing solution.

Passion that is now buried somewhere deep in stock rooms, distribution centers or ad departments or corporate offices.

Do I sound like I am one cranky lady? Well, the fact of the matter is, I am. Why? It's not because the Hilton delivered my breakfast late, or my flight was late, or my Palm Pilot is on the blink…It's because we all know better. And that's what I'm going to talk about this morning.

I'll remind you why we all know better. I'll tell you what consumers expect of us so why we better know better. I'll show you examples of retailers who do know better (thank heavens). And I'll leave you with a few "choice words" that will hopefully help you put a little passion - emotion -- back into your retail life.

Let me step back a little, regain my composure, and tell you a retailing tale ...

Once upon a time, a long time ago, a little girl grew up in a small town in the Australian bush. A town called Cooma, about 300 miles southwest of Sydney, at the foot of Mount Koskiusko in the Snowy Mountains, in the heart of sheep country.

Aside from doing all the things that little girls do in the bush like go to school, take ballet lessons, play hockey, perform in the school plays, go to the beach for the Christmas holidays - she also went shopping.

At five, her favorite store was Learmont's Pharmacy on Massie Street. The friendly white coat of the chemist, the welcoming greeting. The sense of wellness. But it was more than that.

It was the dream of one day wearing that red Revlon lipstick featured in the display on the counter -- "Cherries in the Snow." It was the wonderful smell of Chanel #5 that wrapped itself around the store -- conjuring up memories of her mother all dressed up, off to a party, coming in to kiss her goodnight. All the possibilities in a chemist shop in a country town.

When she was seven, her favorite shop was Miss Upwood's Book Shop. Stepped back off Commissioner Street, up the stairs, through the dark wood door. It was the best world a seven-year old reader could ever imagine….Miss Upwood was a little scary, a little musty. But the store…it had a warm, rich smell of leather bound books, easy chairs, and lace curtains.

In the back corner was the children's section where a small reader could find a chair just her size and immerse herself in the wonderment of the latest adventures of the Bobsy Twins, Noddy and Big Ears, or Beatrix Potter's Peter Rabbit. Magical.

And if you were good and read quietly there was a chocolate to send you on your way, scurrying through the wooden door, down the steep steps, homewards. All the while still dreaming of the possibilities as the rich chocolate melted in your mouth.

At twelve, it was the local newsagent that caught her shopping fancy. The store filled with newspapers and magazines. Best of all, the racks loaded with all the movie and fashion news.

"The Beatles arrive in Sydney" screamed the headlines. "Hayley Mills gets her first screen kiss in a new Disney feature, 'The Moonspinners'," hollered the latest news from Hollywood. "Jean Shrimpton in a miniskirt horrifies the crowds at the Melbourne Cup horse race," cried Woman's Weekly.

You could read about anything, anyone, anywhere. Dream about wearing that miniskirt or that first kiss. Until Mr. Kerr yelled out, "Wendy, your mother said you should be home doing your homework."

There were the holiday visits to the big city and the big city department store. All marble floors and mirrors and elegant displays. The staff in black dresses with white collars. The counters upon counters of cosmetics, and fragrant smells. Fashion parades with the latest fashions. More hats, shoes, bags, jewelry than one could ever imagine.

There was afternoon tea in the 6th floor restaurant - chicken sandwiches (no crusts), and a milkshake to die for.

A breathtaking expedition of possibility, all wrapped up in a black and white houndstooth check shopping bag, elegantly imprinted "David Jones."

Months later when the holidays were a dream, the arrival of the David Jones catalogue in the mail recreated the most luscious of memories.

At 15, shopping fancies turned to America. The "Ladies Home Journal" arrived from grandmother in Sydney filled with untold tales of shopping adventure. The best? The advertising for a New York department store - very chic. Ads very black and white, featuring a very elegant, very aloof woman, with the line "Very Saks Fifth Avenue."

Imagine then - 10 years later, stepping off a plane, and for the first time stepping onto Fifth Avenue, and into "Very Saks Fifth Avenue." Fantasy fulfilled. All the possibilities. The sights. The sounds. The emotion of it all.

…. So, where did it go?

It is, of course, so easy to say, "That was a long time ago." "These are childish memories." "Retailing can't be that way any more."

"There are too many stores -- too many big stores." "It's a big business." "There's no room for intimacy." "No one can get good help." "We have to be efficient. With consolidation, we have to manage our costs, our inventories, just to compete."

And yet, surprise of all surprises, in this day and age, when retailing has increasingly become a business that lacks emotion, that lacks differentiation, that lacks customization, intimacy, transparency, adventure, excitement -- that rarely offers the potential to dream, American consumers want just that.

They increasingly demand an emotional connection to the places they shop.

How do I know? Since 1989, as a core part of our strategic consulting practice, we at WSL Strategic Retail have studied How America Shops ®.

We have talked to consumers around this country about how they shop, where they shop, why they shop, and what role shopping plays in their lives.

We've seen them struggle through the recession of the early '90s with the help of discounts and discount retailers to stretch their dollars. We've watched them efficiently absorb all the new shopping formats of the last decade, cross shopping all manner of stores, price points and formats - brick, paper, electronic.

We've seen them integrate shopping into their everyday life - part necessity - part adventure, part work - part whimsy, part pragmatism - part emotion. "I shop therefore I am" became their credo. Their battle cry.

Then, after six years of living in a shopping frenzy, we heard them cry "Stop!" when their closets were full to overflowing, were overstuffed with more and more of the same.

We've seen them when their world -- our world -- came to an end one clear September day. Then saw them reevaluate their life - their shopping life -- so they could move on.

And through all this, when everyday low price became king, when convenience became a given, when service was forsaken, they increasingly looked to emotional factors to help them differentiate one look-alike retailer from another.

Four years ago in How America Shops ®, it became clear that Americans' notion of "value" was beginning to change. Shoppers demanded the functional aspects of good prices, convenience, appropriate selection and rudimentary service as basic requirements of any and all retail outlets - be they discounters, catalogues, department stores or web sites. But that was merely the price of entry.

By the end of 1999, consumers began to look for emotional elements to drive their shopping loyalty.

What shoppers had learned in the heady, boom days of the late 1990s was that the emotional value they got out of their shopping was now a critical part of their value equation -- and their life.

Finding what they needed easily, conveniently, every day, at good prices, then getting out of the store quickly was essential, but now it was enhanced by the "thrill of the hunt." "Browsing," "shopping to see what's new and interesting," "shopping where it's upbeat and entertaining," where they "could meet a friend" became increasingly important - became essential enhancements to their shopping value.

They began to evaluate retailers based on their EQ, their Emotional Quotient (as we call it). That balance between function and emotion.

But why then? Why, in the midst of a booming economy did American shoppers demand an emotional connection to the places they chose to shop?

It's easy - because they had so many places to shop. Because they knew where to get the lowest prices in town. Because convenience was a given…(stores on every corner - or a web site -- open 24 hours, all carrying the same basic merchandise). So they upped the ante. "Dazzle me" they said.

In our 2002 How America Shops ® study, titled "The Overstuffed Consumer - Before and After," shoppers restated the importance of the Emotional Quotient, this emotional connection.

In a world where they have so many convenient places to buy the same merchandise at good prices, they told us that what now distinguishes one shopping place from another is an emotional comfort level; a place where there is opportunity to browse, to spend time (literally or metaphorically); to find something new, different, surprising - all in a compelling environment.

That's why Americans happily, willingly, confidently now shop at train stations, in airports, at ball parks, museums, even in coffee shops.

The clue to it all is in the browsing.

When asked to define what characterizes their "most" favorite place to shop, shoppers combined the functional aspects of appearance, cleanliness, and convenience with a "good place to spend time browsing."

In fact, that was the key difference between their most favorite and their least….

And boy, has browsing become increasingly important -- in just two years it increased from 30% to 57%. In just two years….

What browsing signifies is this -- it is the shoppers' willingness to devote some of their very precious time to a particular place. A vote of confidence, of connection, beyond the practical realities of doing the essentials and moving on. A willingness to trade - or consider trading -- their time for what you have to offer.

And so we have come to a point when the retailing business is no longer purely a business of trading goods for money. American consumers are telling us loud and clear that they no longer accept that old retail model. Consumers today are seeking new connections with the places they shop that are not about retail at all.

Remember the story I told you about Miss Upwood's book shop and its emotional resonance? Did you mumble…"Can't be done today, not possible…she's crazy,"…mumble, mumble?

What -- if not that -- is Barnes & Noble? It's Miss Upwood's 40 years later.

Barnes & Noble is a company that redefined the way consumers buy books - and spend their time. Barnes & Noble, created a new model not only for selling books, but for the way we think and feel about shopping.

Barnes & Noble broke all the rules. Just like Miss Upwood's, you can sit in an easy chair, read a book, hang out over the magazines - don't even have to buy. You can listen to music, or a lecture, meet a friend, have a cup of coffee. Kids are welcome. If you choose to buy, you even save money.

Barnes & Noble created an emotional connection with shoppers far beyond what shoppers expected. Barnes & Noble created a new town square, a new meeting place, a haven - at discount prices. EQ = function + emotion.

What about Starbucks? If ever there was a retailer that was about EQ, Starbucks is it.

Why is it that when a New York coffee drinker can buy a good cup of coffee from a street vendor at the corner of 24th Street and 6th Avenue for 75 cents, she would even bother to walk three steps into a store that sells good coffee for $3.55? It's the EQ.

EQ that translates into "a moment of luxury." Standing on line for five minutes in the yellow/ochre warmth, enveloped by cool jazz and rich coffee aroma, while easy chairs beckon "come sit just for a moment." A moment of luxury - worth every penny of $3.55.

EQ that translates into a "place of discovery" in a supermarket in Woodybury, MN. At this Kowalski's Market shoppers are invited to "discover everything from the ordinary to the extraordinary."

From the ordinary produce department of a traditional food store -- to the extraordinary of a Tuscan villa that is the floral and gift department.

From the ordinary of the health and beauty aids aisle to the extraordinary of an Aveda store and spa. The extraordinary of an eating place -- with log fire, no less -- perfect to luxuriate in front of on a cold Minnesota day, with Starbucks coffee and a sandwich of freshly-baked Tuscan bread.

From the ordinary to the extraordinary -- yoga classes, cooking classes, wine tastings, Kindermusik classes, even Feng Shui classes. From the ordinary to the EQ.

Right around the corner here in Chicago…at American Girl Place, the Emotional Quotient rings from the rafters the first step you take into the store. No simple toy store this - and yet it is. But here, rule breaking too is part of the emotional culture.

Where the girl and her look-alike doll are the customers - no mistaking that. Where all the functional "workings" are behind the scenes so as not to the spoil the experience. Where the doll has a place at the table. EQ!

Emotion translated in to a chain of stationery stores called Kate's Paperie. At Kate's you are embraced by paper. It winds its way around the ceiling beams, wafting in the breeze. It stacks in bold colors, enticing the writer.

And at every turn, a new adventure. From the ordinary to the extraordinary: From birthday cards and Mother's Day cards to custom-printed cards for special occasions; stamps for decorating a page of Japanese rice paper; day planners and journals with silk embroidered dust jackets that entice shoppers to dream. A Hallmark store to the power of EQ.

But EQ is not confined to the specialty environments. It's a convenience store in Tokyo that promises Three Minutes Happiness just by being simply and clearly merchandised - and a great sight for the eye.

Or a bank - a bank! - Commerce Bank that is open on Sundays - with real people to help work-weary customers. That's an emotional connection.

Or a web site,, that takes an order for balloons on a New York winter afternoon and delivers them door-to-door 2 hours later 10,000 miles away in sultry, steamy Sydney. EQ!

The business of retail used to be about providing consumers with goods they needed /wanted/ might want /didn't know they wanted, at a profit (hopefully). But, and it's a very big BUT, American consumers are telling us all loud and clear that they no longer accept that retail model.

Today they are seeking a new connection with the places they shop. They are seeking the extraordinary with the ordinary. The functional with the emotional.

That's why a retailer such as Wal-Mart is so phenomenally successful. Because it provides both.

Do not for a moment think that the Wal-Mart proposition is purely about every day low prices. It is about that, but so much more.

It is about the emotional rush of standing at the front door of a 200,000 square foot supercenter, marveling at "so much stuff" - and knowing that regardless of who you are, and how much you earn, you can afford it.

It is about being assured that every day you will be able to find the ordinary, in-stock at a very fair price, any time you want. And it's about knowing that some days you may find the extraordinary --like a $19.79 television set -- when you least expect it.

Affordable abundance always. A compelling emotional connection. Where function meets emotion.

In the end, it is a simple and as complicated as that.

In this day and age of ever-increasing competition, there is always some other retailer that can provide the functional just as well -- if not better -- than you. That's only the price of entry. But it is the price of entry. Don't do that, and the shopper won't even show up a second time.

Function provided, then you must wrap around the emotional fabric that ties the consumer firmly, consistently, loyally to your store, your catalogue, your web site.

As in all of our lives today, even our shopping lives, we search for an emotional connection that will allow us to differentiate the same from the unrivalled, the ordinary from the extraordinary. An emotional connection that allows us to dream of the possibilities, to anticipate the new, to smell the excitement.

Whether it's a store in a country town in the Australian bush, a coffee shop on a city street corner, or a super supermarket like no other.

We are now in the emotion business. Are you ready? What's your EQ?


The Author

Wendy Liebmann is the President of WSL Strategic Retail and Editor of WSL From the Edge. Visit for more.

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