Ron Burkle ups the ante

Ron Burkle is a well-known investor with active positions in Barney’s and Barnes & Noble. In today’s RetailWire, panelists discussed his interest in bigger stakes in both retailers. Here’s my take:

It’s probably a good time to buy into the luxury segment after a period of depression and some prospects for stronger growth. Mr. Burkle will want to demonstrate that he has a credible growth plan for Barneys, however, since it has expanded in fits and starts over the past several years. On the bookselling front, “be careful what you wish for.” Yes, there are market share gains to be made at the expense of Borders’ struggling bricks-and-mortar business…but B&N has entered the e-book fray just before Apple promises to turn this segment on its ear.

Amazon vs. MacMillan: Who really blinked?

Amazon withdrew some MacMillan Publishing titles from its Kindle, and then reinstated them after succumbing to pressure to raise its retail price above 9.99. There is a lot of speculation that Amazon “blinked” partly in response to Apple’s e-book retail model for its iPad. I’m not sure I see it that way…my comments from RetailWire follow:

If it’s correct (as reported) that Amazon and other book resellers are paying 50% of the cover price to publishers, it shouldn’t matter to those publishers whether Amazon loses money at 9.99. If anything, the price point is driving much greater unit volume than if the same best-sellers were priced at 14.99. It’s hard to determine whether the publishing industry as a whole is ready to take on the 800-pound gorilla of the book retailing business (whether online or e-books) as well as other fast-growing resellers of books like Walmart who are engaged in a price war with Amazon anyway. Bottom line: price maintenance hurts the consumer, curtails demand and is a hard business model to maintain over the long run.

Restructuring at Walmart: A good move?

Walmart recently announced a restructuring of its U.S. operations to create three regional organizations (including three new “presidents”)…and most RetailWire panelists were skeptical about the changes. Here’s my point of view:

If the reorganization succeeds in its stated goals (“catering to local tastes, finding real estate in saturated markets, developing and empowering local store talent, and expanding e-commerce”), good for Walmart. But at first glance the structure sounds top-heavy and cumbersome. A company of Walmart’s size surely has the IT sophistication to provide localized content solutions without breaking itself into three separate merchandising organizations. (Macy’s, in contrast, is using its “My Macy’s” initiative to tailor local assortments while consolidating multiple buying groups to just one.) It also sounds like Walmart has some retention and succession issues at play if it needs to hand out more “president” titles than ever before, and runs the risk of more diffuse decision-making. Interesting to see what other panelists have to say, especially if they are more familiar with the players and culture at Walmart.

What’s in store for Valentine’s Day sales?

Retailers can expect to see modest gains for Valentine’s Day, just as they did for holiday shopping. There’s a sense among consumers that “the worst is over,” despite high unemployment, especially compared to the mindset a year ago of being at the edge of a precipice. And jewelry turned out to be one of the strongest categories at retail during 4th quarter — jewelry is a traditional driver of Valentine’s Day business, so this year’s holiday results should be upbeat.

Apple’s iPad: What do you think?

Apple introduced its iPad last week with plenty of fanfare. Meanwhile, a lot of “experts” (including my fellow RetailWire panelists and myself) got a chance to weigh in on a device that none of us has actually seen! Here’s my take:

Apple was smart to price the “starter” model of the iPad at $499, considering all the speculation of a $1000 price tag. But chances are good that early-adapters are going to pay hundreds more for the features they want. At the end of the day, I still wonder whether a $299 netbook with a broadband card (and cheaper data plan) will satisfy many potential customers.

I’m sure the iPad is beautifully designed (as with all Apple products) and will fly off the shelves, but I’m surprised by a couple of apparent shortcomings. For example, there is no video camera: Given the ubiquity of Skype and similar programs, this is a major shortcoming in terms of the iPad’s practical use. And aligning with AT&T for 3G connectivity is an odd choice given the controversy over their network problems.

Borders changes CEO again

Borders announced this week that its CEO over the past year is leaving the company, to be replaced in the top job by its head merchant. It’s hard after one year to condemn the departing CEO when so many of the company’s challenges have to do with long-term execution and strategic brand management. Here’s my take from Retail Wire:

Here’s an example of the sort of nuts & bolts issue that is holding back Borders: If you try ordering “Game Change,” the best-selling non-fiction book in the country, you’ll find it in stock at Amazon but on two weeks’ back-order at borders.com. And doing a bricks-and-mortar search for the same title shows about half the stores in my trading area to be out of stock.

It’s very hard for the also-ran in the bricks-and-mortar book business to compete at this level of execution. Barnes & Noble is showing sales growth at its website that will start to offset comp sales declines at its physical stores. (And these sales drops are more modest than Borders to begin with.) If B&N capitalizes on the e-book trend with its own device and compatible items like the Apple tablet, it has a credible long-term way to compete against Amazon.

Meantime, Borders has struggled for years with a viable competitive argument to shop its stores. It has withdrawn from a lot of the music and video business that once gave it a brand identity, but it’s left with overspaced stores as a result. But the bottom line: It doesn’t matter whether the new CEO is focused on the balance sheet or on branding initiatives until he or she gets the execution right.

Not easy being “green”

RetailWire panelists had a chance this week to weigh in about “green” apparel and what’s holding it back from mass-market success. I think it’s premature to write off the trend:

Eco-friendly fashions have every chance of being successful sooner rather than later if they focus on style and value (not necessarily opening price) instead of using “green” as the driving force. There is plenty of opportunity for organic cotton and natural fibers like bamboo in the marketplace, but mainstream consumers seem unwilling to pay an excessive premium for them. To tie back to yesterday’s discussion about Macy’s (and its “open call” for new vendors and designers), this would be an ideal opportunity to get a midtier retailer in partnership with a “green” supplier committed to put trend and value first.

“Casting call” at Macy’s

Macy’s has announced a “casting call” for new designers and vendors, and most Retail Wire panelists agree with me that it’s a good idea to refocus on product:

Whether Macy’s uncovers the next Tommy Hilfiger or a viable new vendor through this process, it’s good to see that they are looking outside the box of their existing resource structure and roster of private brands. For all the attention paid to “My Macy’s” over the past year, the best game-changer is great merchandise content. And the PR associated with the “search for the next great designer” won’t hurt, either…reality show, anyone?

Home Depot spends on handheld technology

From a recent Retail Wire comment about Home Depot, which is equipping its sales associates with handheld devices:

Apple stores have been using handheld technology for years, and the surprise is that other retailers (from DIY to discounters) have been so slow to react. This is a great technology for tracking inventory and especially for getting customers out the door more quickly (better than, say, self-checkout). It’s easy to see other, sales-driving uses for handheld technology — such as issuing “instant coupons” to customers using a database that can pull up their purchase preferences from their phone numbers. $60 million seems like a modest investment in this kind of technology.

“Store within the store” idea gains traction…a good thing?

How useful is the “store within a store” idea? Retail Wire panelists recently weighed in:

The answer to the “store within the store” concept is, “It depends!” For example, Sephora has given JCPenney some critical mass and credibility in the cosmetics business that it was unable to achieve on its own, and it continues to surprise me that they have not rolled out this initiative faster. For other areas, such as toys, it makes sense for a retailer who is not a “category killer” to give itself the halo effect of a well-known specialty concept.

On the other hand, the concept can be carried too far. I still believe that traditional department stores have taken the European-style idea of branded “shops within the store” too far in apparel areas, causing a lot of duplication of assortment and navigation issues for consumers.