Archive for March, 2009

Is This Meeting Necessary?

Today’s Retail Wire panel discussion addresses some provocative ideas from Seth Godin on how to run more efficient meetings. My take:

Mr. Godin’s recommendations are meant to be conversation-starters but also make some sense. They address the very real concern that time management is a lost art. Individuals in the workplace are hampered getting their own tasks done and leaving some time for productive thought if they are caught in an endless loop of meetings and e-mails. Many meetings happen out of a sense of the manager’s self-importance, not out of any urgent need to gather a group together.

The most important suggestion of all is missing from the list: The person in charge needs to start by asking the question, “Is this meeting necessary?” If the honest answer is “No,” then the meeting shouldn’t be scheduled in the first place. A lot can get accomplished through five minutes of personal interaction between two people rather than scheduling an hour for a dozen people. This may seem to run counter to the idea of “team building” but in fact is more respectful of the team members’ most important asset: time.

Amazon: Best-of-class retailer of the moment?

Today’s Retail Wire poses the question to panelists: Is Amazon currently the “best retailer in the world”? At least one contribut0r (Barton Weitz, author of the retailing textbook I use in my undergraduate class at the University of Wisconsin – Milwaukee) questions whether Amazon can be considered a retailer at all vs. a “portal” for others’ goods and services. My comment follows:

Amazon has reinvented the concept of the web-based retailer as the new “department store,” without ever feeling the need to develop a parallel bricks-and-mortar strategy. They fly in the face of the conventional wisdom that multichannel retail is the only way to go. And they brilliantly leveraged their original focus on books to develop credibility in many other categories. Their emphasis on breadth of assortment, competitive pricing, great execution and customer relationship management should be a lesson to all retailers.

Discounting — how much is too much?

Today’s Retail Wire discussion quotes a researcher from the Yankelovich research group, questioning excess discounting during a recession:

“Lowering prices during a recession clearly raises suspicions among consumers,” said J. Walker Smith, Ph.D., president of the Yankelovich MONITOR and executive vice chairman of The Futures Company, in a statement. “Drastic price cuts like those seen during the past holiday season create a double-barreled risk for brands. First, such price cuts generally fail to generate enough business to pay for themselves, although clearing inventory is of some value. Second, they create long-term difficulties in terms of consumer expectations.”

I don’t think the issue is black-and-white as far as retailers are concerned. Here’s what I had to say:

This question is more nuanced than the expert from Yankelovich would have us believe. Whether lowering prices is a smart idea or not depends more than anything on the brand positioning of the retailer, not on the ups and downs of the economy. Certainly Walmart has built an empire on its mission of offering lower prices whether the U.S. is in recession or not. And many other value-oriented retailers (JCPenney and Kohl’s, to name two) embrace sale events as part of their strategy.

Where Mr. Smith has a valid point is the runaway discounting that happened in the luxury arena last fall. (It’s going to be tough to get the regular-price genie back in the bottle.) But most retailers learned the hard way last fall to offer better value if it wasn’t already part of their DNA. Abercrombie stands out as a retailer that staked out a lonely position on maintaining regular-price integrity, and suffered the consequences in terms of lost market share.

What’s wrong with the regional mall…and what’s right?

Today’s Retail Wire discussion quotes mall developer David Simon, who expresses optimism on the lfuture of his business. I take a different position: The long-term prognosis for the enclosed regional mall is mixed. Malls face at least a couple of distinct challenges:

1. The mall anchor tenant base is in jeopardy. There is only one national “traditional department store” (Macys), with JCPenney having a different value positioning and Sears having its own issues. Many malls are anchored by regional department stores in various degrees of difficulty, and the market share of traditional department stores has been declining for years. So the biggest “draw” to the regional mall simply isn’t a great traffic driver any more.

2. Real estate overdevelopment has led to a situation where weaker malls and stronger malls are within a few miles of each other, in healthier communities. At the same time, many older malls have suffered from flight to outer-ring suburbs for many years. I visited Northbrook Court and Old Orchard, about 10 minutes apart in north suburban Chicago over the weekend, and all the customers were at Old Orchard.

These are only two issues confronting the regional mall. What are some of the solutions? There’s a long list, but I would point to the tenant base, to ensure that the anchor mix includes big-box stores and value-oriented retailers where appropriate. (Don’t let all the traffic and frequency flee to the power centers!) I would also make sure that the tenant mix is kept current, including a variety of eating venues to help keep consumers at the mall longer.

Mr. Simon has reason to be optimistic, and not just because he is in the mall business…but not without some serious reinvention of a 50-year-old concept.

Should Home Depot spend money on better service?

Short answer: Absolutely the right move for Home Depot. The current management already undid some of the damage made by Bob Nardelli when he was the CEO, and there is still work to be done. The best parallel from a strategic standpoint is Best Buy, which rose to the top of its market by stressing customer service while its chief rival eliminated its best sales associates in a cost-cutting move. (And we all know how that worked out for Circuit City.) In fact, the “Geek Squad” premise would be a good concept for Home Depot to follow, giving its stores the halo effect of great service while also driving a free-standing revenue stream.

Joseph A. Bank’s answer to the recession

Today’s Retail Wire discussion focuses on Joseph A. Bank, and its latest sales-driving offer: Refunding $199 to any suit purchaser who subsequently loses his job in the next few months. My reaction:

Joseph A. Bank has staked out an interesting market position for itself: Men’s traditional clothing (especially suits and sport coats) at highly promotional prices. They have staked out a value posture far below Brooks Brothers or even most department stores (with some expected compromises in quality), and have a less updated point of view than Men’s Wearhouse stores. Barely a week goes by without a deep discount on men’s clothing, including an offer after the holidays of “Buy a suit, get two free.” Their last earnings release indicates the formula seems to be working.

The latest promotional idea is a good one: It highlights the bargain-basement prices for suits that Joseph A. Bank is known for, and draws potential shoppers off the fence if they are hesitating to spend money on career clothing right now. The downside risk to Joseph A. Bank (refunding $199 if the customer loses his job) is relatively small compared to the likely increase in sales and brand awareness. Good idea!

Trend direction — end of an era?

Today’s Retail Wire comment touches on the New York Times article that appeared over the weekend, regarding the number of established retailers shutting down their “Fashion Director” functions. Here’s what I had to say:

For a relatively small cost, fashion and trend directors can help steer department stores and luxury retailers toward “big ideas.” Most national companies drive their apparel product development a year in advance, and it seems a small price to pay if fashion directors can help galvanize their stores (and, in turn, their consumers) in a particular trend direction. If anything, this role might be more important for the Macy’s of the world rather than a store like Neiman Marcus, where so much trend direction is set by individual designers anyway. One of the underlying causes of the current retail slump is the lack of a “big idea” — it’s not just about the economy — so this trend looks short-sighted to me.