[Image of: RetailWire Logo and Tagline (for print)]

BUSINESS TIPS

ChannelAdvisor:
Online Selling Strategies
Offerpop:
Social Marketing Campaigns
RR Donnelley:
In-Store Marketing
LoyaltyOne:
Enriching Customer Relationships
 
[7 comments]

Apple Finds New Way to Bag Sales

January 2, 2014

In Japan, an annual post New Year tradition every Jan. 2 is "Fukubukuro," when retailers hand out "lucky" or "mystery" grab bags full of unknown discounted merchandise.

Bags are said to be worth at least double the price paid and, in some "lucky" cases, exorbitantly more. Japan's retailers use the day to quickly clear inventories to help start the new year with a clean slate.

The tradition has received heavy coverage over the last few years from tech bloggers in the U.S. because Apple's stores are involved. Last week, Apple Japan announced that it would be selling lucky bags at a cost of 36,000 yen, or around $345 each. In the past, bags would contain iPods, random accessories and t-shirts, but a few have included iPads and even MacBooks.

The numbers of mystery bags are usually limited, leading to long lines before stores open at 8:00 a.m. at Apple's seven stores in Japan as well as other stores participating in the tradition. The bags can't be exchanged and only one can be bought per person at each store.

In a similar vein in the U.S., one popular trend last year was the marketing of limited-edition subscription box deals, also known as "mystery boxes" because consumers don't exactly know what's inside. A set of $250 mystery boxes from Neiman Marcus in partnership with PopSugar in October instantly sold out.

In the U.S., many Sanrio Stores, the parent of Hello Kitty, are said to adopt the tradition. Since 2004, Ala Moana Center, Royal Hawaiian Center and other malls in Honolulu have also participated in the tradition. In many cases, stores are promising bags worth double their value. At Royal Hawaiian Center, Forever 21's marketing copy states, "Get lucky at Forever 21's Fukubukuro event and purchase a mystery bag full of gifts that is valued at $40 and only pay $21 for it!"

"It's really the excitement, adrenaline rush," Fukubukuro shopper Ebony Joy Winston told KHON2 in Hawaii.

FINANCIALS:     [NASDAQ:AAPL] [ ]

Discussion Questions:

What do you think of the potential of "lucky" or "mystery" bag campaigns in the U.S. mainland? What are the pros and cons versus other inventory-clearing schemes?

While we value unfettered opinion, we urge you to show respect and courtesy for people or companies about whom you comment. Keep in mind that this is a public, professional business discussion. RetailWire reserves the right to edit or refuse the publication of remarks that we deem unsuitable. We may also correct for unintended spelling and grammatical errors.

Instant Poll:

What's the likelihood that similar "mystery bag" campaigns will become more pervasive in the U.S. outside of Honolulu over the next decade?

Comments:

People love to get something for nothing...or more than what they paid for. Lucky/mystery bag campaigns fulfill this want. As long as the customers are willing to buy up the boxes of goodies, retailers can decide the content that will keep customers coming back after the mystery is revealed. When Apple can charge hundreds of dollars and sell out their lucky bags, the opportunity for other retailers is real. It's a question of understanding what your customers will deem worth the price asked.

In turn, the inventory-clearing scheme may have more viability for some product categories than others. But retailers have their own and competitors' history to examine and learn from.

[Image of: View Braintrust Panelist button]
Joan Treistman, President, The Treistman Group LLC

This is a great concept practiced by e-commerce operations for over a decade. The benefit has more to do with social media promotion as I outlined in the previous Neiman Marcus discussion.

Buzz is generated on social networks about the availability of the boxes; the rush is on when the mystery box is activated and people who were lucky to buy a box are guessing what they have by the weight of the box.

The biggest fun is the YouTube videos of people opening up their mystery box for the first time and excited they have a store-branded calendar among their findings...

From my understanding, these mystery bags are pretty profitable and effective social marketing campaigns and not enough retailers are taking advantage of this concept.

Ed Dunn, Founder, (Stealth Operation)

Unsold merchandise after peak holiday periods is inevitable. The old adage of retail is "the first markdown is the best markdown." "Fukubukuro" has two some very attractive components for retailers:

1. Consumers can't cherry pick the remaining items
2. Typically there are no returns allowed
3. Mystery bag events generate traffic in a slow period

Retailers are the best "copy cats" in the world. So I would predict that the campaigns of using mystery bags will spread. However, too much of a "good thing" quickly kills the effectiveness.

The retailers employing this practice would do well to remember these key caveats:

  • Mystery bags can NOT become just a dumping ground for clearance items.
  • Mystery bags promotions have to be used for a very limited period, and are best for a one time promotion, limited to one day, no more than a week.
  • To generate the benefits of traffic, this campaign has to be promoted well in advance; even better to have mystery stories (social media) showcasing both the value and surprise elements.
  • There has to be "true value" in the bags as perceived by the consumers (not the retailers).
  • The retailers that do well create a sense of "mystery" by creating and promoting a few "lucky" bags with significant items of "great" value.

If executed well, "Fukubukuro" is like "safe gambling" where consumers have a chance to win the bigger prize, but are "guaranteed" something of more value for their money.

[Image of: View Braintrust Panelist button]
Chris Petersen, PhD, President, Integrated Marketing Solutions

The element of surprise has long been an effective enticement for marketers, as long as the surprise is perceived as a value. This is critical for "mystery" bag campaigns, as well. I wonder what would happen if merchants used their customer information from loyalty programs so that they can orchestrate the mystery bag to correlate with individual member preferences? The information could better assure the surprise will hit the mark, and be more likely to clear inventory.

[Image of: View Braintrust Panelist button]
Bryan Pearson, President and CEO, LoyaltyOne

This isn't anything new. It is just not widely used. The Neiman Marcus Mystery Box, as mentioned in the article, sold out. Why? Because consumers know Neiman Marcus won't take advantage of them and risk their relationship on a "cheap" trick to move unwanted merchandise.

Important to note that there is a big difference between unwanted merchandise and high-inventory merchandise.

The pros are obvious. The cons come into play if the retailer is selling anything less than desirable merchandise. It erodes, if not completely destroys, customer confidence and loyalty.

[Image of: View Braintrust Panelist button]
Shep Hyken, Chief Amazement Officer, Shepard Presentations, LLC

Specifically, I think a mystery bag or box campaign that is curated (i.e. POPSUGAR Must Have boxes) is a great idea and offers a deeper, fun connection for fans of a brand or retailer.

But, as a means of inventory-clearing, a mystery bag (or box)is dicey and has the potential to turn away customers if they feel they have been deceived by receiving useless items, the offerings duplicate what is already owned or the perceived value is not met.

When retailers or brands try these campaigns, it is best to be forthcoming about what the mystery offerings may be and try to ensure the bagged or boxed items carry the perceived value the shopper expects.

[Image of: View Braintrust Panelist button]
Karen S. Herman, Founder & Design Director, Gustie Creative LLC

Who doesn't love a swag bag? Even if I don't use it all myself, I can always share with my friends and everyone is happy. The key is figuring out which categories within the brand will work best for this. The rest is a no brainer. IMHO

Lee Kent, Brings Retail Executives Together to Meet.Learn.Profit, RetailConnections

Search RetailWire
Follow Us...
[Image of:  Twitter Icon] [Image of:  Facebook Icon] [Image of:  LinkedIn Icon] [Image of:  RSS Icon]

RetailWire's
Getting Started video!

View this quick tutorial and learn all the essentials...

RetailWire Newsletters