Understanding the meaning of Black Friday 2009

Black Friday is no longer the biggest shopping day of the year and lost that title several years ago. In the depths of last fall’s slowdown, it may have even lost its crown as the highest-traffic day too. Nevertheless it is still an enormous volume day for most retailers and a bellwether for the holiday season.

What should retailers and observers look for this year? Here’s a short list:

1. Who are this year’s winners and losers in terms of foot traffic and “share of shopping bags”? This will give a good sense of overall 4th quarter winners.
2. What’s selling? Is it the traditional Black Friday assortment of doorbuster electronics and toys, or is there any visible shift toward discretionary goods like apparel?
3. How’s the mood? Is the shopper visibly relieved that we all avoided the precipice last fall, or does high unemployment still weigh heavily on consumer behavior?

Is the shift to opening-price brands a long-term trend?

It’s hard to say whether current trends like trading down to opening-price store brands will outlast the recession. It’s clear, however, that consumers are shifting from national to exclusive brands. Retailers are pushing these exclusive labels hard, in part because of the margin benefits and in part because of the added value perception of these brands. So the search for “value” (not just price) is likely to be a long-term after-effect of the recession.

In fact, the market share numbers make it clear that the search for value began long before the current recession. How else to explain the rapid growth of discounters, off-pricers, warehouse clubs and other mass merchants at the expense of traditional retailers like mall-based department stores? This trend is only going to accelerate in the future, as consumers grow even more focused on living within their means.

Can SuperValu turn it around?

Craig Herkert is the recently hired CEO at SuperValu and announced a faster growth strategy for the chain’s Save-a-lot small-format store. Retail Wire panelists weighed in recently on the subject:

Mr. Herkert has only been at the SuperValu helm for five months, but he has a big turnaround task in front of him:

1. Judging from the last quarter, it looks like wholesale distribution has declined to only 30% of SuperValu’s revenues. At one point this was the company’s core competency, but Target and doubtless other accounts are moving toward self-distribution as a way of controlling their own supply chain costs effectively.

2. SuperValu has made acquisitions in the traditional grocery business (such as Albertson’s) at a time of long-term decline for this business. One parallel would be the merger of two lagging regional department stores…there may be short-term benefits of scale but SuperValu is fighting bigger competitors such as Kroger and Safeway, not to mention the inevitable shift of share to supercenters.

3. The Save-a-lot strategy seems sound, but Aldi already has a national head-start with this concept and Walmart is right around the corner. The question is whether SuperValu can roll out Save-a-lot quickly enough to move the revenue and profit needle…or whether it might trigger divestiture of some of its lagging businesses to make it happen faster.

Setting the right marketing tone in today’s economy

Retail Wire recently invited panelists to discuss a list of marketing themes appropriate to the new economic reality. The item on the list that resonates the loudest to me is, “Can your product or service allow her to do more with less?” There is no doubt that consumers are managing more closely to a budget than in the past, and questioning the need for every purchase. At the same time, the aspirational mindset of shoppers didn’t disappear overnight. So the challenge of “more for less” is a good one for marketers and retailers: How to convince the female shopper in particular that she is getting more for her money, and maintaining her family’s lifestyle to the best of her ability. The genius of Walmart’s tagline for the past couple of years (“Save Money. Live Better.”) is that it speaks to both of these goals.

Why are retailers slow-moving on new media?

Retailers are still fixated on “old media” (broadcast, circulars, print and so on) along with measurable ways to gauge their efficiency. It’s much harder to judge the results from “new media” such as Facebook, Twitter, and so on. But there is no question that two generations of shoppers are migrating fast from traditional means of communicating with them. The evidence is plain, in terms of plunging newspaper circulation and network TV ratings. The excuses are retailers’ way of saying, “We need to figure this out but don’t know how.”

College textbooks and the search for value

I commented recently on Retail Wire about the consumer’s search for value extending to every area of retail that you can think of. One of the last frontiers for this trend is the textbook business, especially in college bookstores. As a parent of college students and a teacher of undergraduates, this is an issue close to my heart. Here’s my quick take:

The move toward value-oriented retail started long before the current recession. From warehouse clubs to discount stores to off-pricers, these types of stores have been taking market share from traditional outlets like department stores for many years. This trend is going to continue long-term and certainly will extend into categories (like textbooks) where traditional perceptions of value are being threatened by high prices as well as new technology.

Linens n’ Things: Showing a pulse in Canada?

I would echo the same comments I made a few months ago, when Brain Trust panelists talked about the web-only “play” being made to keep the Linens n’ Things name alive. By the time somebody attempts to revive the brand in the U.S., the damage has already been done to the brand because of the Chapter 11 filing and the sudden closing of hundreds of stores. Jump-starting the brand in the future assumes that desirable real estate is still available (maybe so). It also assumes that surviving competitors (from Bed Bath & Beyond to Kohl’s) haven’t absorbed all the market share (maybe not). Linens n’ Things may have enough brand equity left to “start over” in Canada but it can expect rougher sledding in the U.S. if it tries to stage a revival.

Liz Claiborne, meet JCPenney

Retail Wire panelists had a chance to weigh on on the move by Liz Claiborne to take its signature brand “exclusive” to JCPenney for the next ten years. My take:

This news story is fascinating on several levels. First, it is probably the biggest development yet in the shift from national brands to exclusive brands over the past five years. Liz Claiborne simply couldn’t afford to let its signature brand languish in several struggling regional department stores and fail in its only national outlet. JCPenney provides the sort of national scale and moderate positioning appropriate for the Liz Claiborne brand.

Second, this represents a major shift in the Liz Claiborne business model. JCPenney will be developing and sourcing goods through its own product development arm, rather than through the Liz Claiborne Company itself. Claiborne is pursuing what you might call the “Iconix model”, a much richer financial model tied to brand management rather than sourcing and manufacturing.

Finally, the Liz Claiborne deal looks like a coup for JCPenney but also represents a big challenge. JCPenney has been guilty for the last several years of brand proliferation and duplication of assortment, especially coming out of its product development team. If Liz Claiborne is going to work at JCP, it needs to be treated as the most important brand in the store…and several other labels need to go away.

What’s the job of today’s store manager?

This makes an interesting discussion alongside yesterday’s Retail Wire blog topic: the increasing role of market-sensitive merchandise content among national retailers. The question is whether store managers ought to be the drivers of that content (as in the old days of JCPenney) or whether those content tweaks need to be driven by central management and smart information systems. If you believe in the latter model, then today’s store manager needs to be focused on good execution as long as the appropriate market-specific product is in the store. This means getting out of the office and getting one’s nose out of reports. The winning retailer will deliver more customer-centric results if the store management team is paying attention to the nuts-and-bolts of replenishment, checkout efficiency and other front-of-the-store experiences.

Are retailers returning to market-tailored content?

Interesting discussion at today’s Retail Wire about the pendulum swinging back toward the old “JCPenney” model of tailored assortments store-by-store. I’m not sure whether this is the right way to characterize a trend that is more IT-based than in the past:

The old JCPenney model may have provided more market-sensitive assortments store by store, but it also created a cumbersome bureaucracy as well as tremendous inconsistencies in customer experience from store to store and from market to market. JCP was smart to discard this system despite all the cultural changes it brought to the company.

The pendulum may be swinging back toward more market-sensitive merchandise content today, but it would be a mistake in an era of slimmer margins and operating expenses to return to the JCP model of 20 years ago. In fact, stores like Macy’s continue to consolidate their regional buying offices to one headquarters function at the same time that the “My Macy’s” initiative takes hold. Other national retailers, like Target and Kohl’s, devoted effort to this challenge several years ago.

The key to successful market-specific merchandising is to have the information systems and headquarters culture in place to drive it. Retailers need a clear line of communication between their field managers and their merchants, in order to provide some market-appropriate content without crossing the line from autonomy to inconsistency. And retailers also need to take advantage of the massive database of regional preferences that their vendors can provide, in order to tailor assortments in the first place.