Archive for August, 2009

“Vendor report cards” at Urban Outfitters

Today’s Retail Wire panel discussion focuses on Urban Outfitters, and its development of a “vendor scorecard” to go beyond the usual chargebacks for shipping violations, etc. My opinion:

There are so many elements to successful supply chain management that it pays for smart retailers to put some metrics in place. It’s not just a matter of ticketing errors triggering a chargeback mechanism, but also questions of accurate data transmission, timely delivery, floor-ready packaging, and so on. A scorecard allows the retailer’s supply chain team to construct a “weighted-average” way of looking at each vendor’s logistical performance. It also allows the merchants to view each vendor’s profitability not just from the usual perspective of sales and gross margin, but also from the broader angle of total profitability. The only surprise in this story is the length of time it took for Urban Outfitters to put these “best practices” into place.

Toys ‘R’ Us meets “Cash for Cribs”

Toy’s ‘R’ Us is taking a cue from the successful “Cash for Clunkers” program, by providing a “trade-in” allowance for a new car seat when you return an old or damaged model to their stores. My opinion:

This initiative is definitely a good idea for a few reasons: First, it reminds shoppers that Toys ‘R’ Us is the “category killer” in this business, regardless of the competition from discounters like Walmart. Second, the program provides a legitimate public service (and good PR) by getting older and potentially defective car seats out of the market. Third, and most importantly, it should drive sales of high-ticket goods at a critical time.

Walmart’s Lee Scott has ten “life lessons” worth considering

Lee Scott, retired Walmart CEO, recently spoke about ten steps toward more effective management, and Retail Wire panelists were invited to comment:

  • Hiring people better than yourself will make it easier to achieve succes
  • Reigning in ego because it is an impediment to leadership.
  • Tell people what you want and you will often receive it.
  • Give others honest constructive feedback.
  • Remember few people feel as though they have a handle of things.
  • What is heard and how it is heard is more important than what you say.
  • You can be wrong about things you feel strongly about.
  • Harsh critics may be saying the very things you need to hear.
  • Don’t look to share praise, give it all away to others.
  • Integrity is the most important thing.

These are good life lessons, not just management lessons, although so broad in their application that they might not always be easy to “teach” in a business setting. And there are a few built-in contradictions on the list, for example:
–Tell people what you want and you will often receive it.
–You can be wrong about things you feel strongly about.

It’s up to others to judge whether Mr. Scott and the Walmart team successfully lived up to his “ten commandments” or not.

Sears…too early for a post-mortem?

One of the favorite Retail Wire topics is the demise of Sears Holdings. It may be premature for the funeral, but it is never too soon for the diagnosis of what went wrong. There are so many issues at play here, it’s hard to know where to begin. Many of my fellow panelists have had plenty to say on this subject going back to the Sears/Kmart deal five years ago:

1. The original deal looks more and more like a financial “play” rather than a legitimate attempt to make something strong out of two weak players, and Kmart should have been killed a long time ago;
2. From everything reported about Lampert’s leadership style, he’s made it impossible to hire a CEO with real autonomy or merchandising chops…and has now made it impossible to fill the job at all;
3. The lack of capital investment in the business, as sales have spiraled downward, has only fed the negative comps. There are so many category killers (Lowe’s, Best Buy) and midtier retailers (Target, Kohl’s) providing more attractive shopping options to the worn-out neighborhood Sears store.

I could go on and on…but the other panelists will have plenty to say on this subject today.

Walmart’s urban initiative: Is the timing right?

The time appears right for Walmart to push its urban initiative again. It’s harder for cities to argue against the sort of economic development and job creation that Walmart represents during a recession, even if many of those jobs are less than ideal in terms of high wages. And Walmart has been smarter in the last few years lining up on the “right side” of some social issues (such as greentailing and health insurance reform), making it harder to paint the company as a pure corporate villain.

City governments would be smart to consider the long-term gains of more aggressive central-city retail development, whether by Walmart or other big boxes that follow in its wake. Private employment to build and then operate big retail stores is probably the healthiest way to keep the economic recovery on track.

Here comes “cash for appliances”

Friday’s Retail Wire panel discussion focused on a new government program to stimulate sales of new, more energy-efficient appliances. Good idea or bad? Here’s my point of view:

Based on the Cash for Clunkers program, there was tremendous pent-up demand that is likely to be followed by a sales slide now that the program is over. But without the program, would there have been a surge in demand at all? Not very likely. It’s hard to say whether the car program will have any sort of ripple effect on overall consumer spending, but at least it puts laid-off auto and partsworkers back on the line to replenish inventory.

So “Cash for Appliances” may have a similar benefit, as long as it’s explained more clearly and administered more smoothly than “Cash for Clunkers.” (Hmmm…maybe that 20-year-old wall oven with a broken timer light qualifies?) $300 million in the scheme of things is a small price to pay for the likely benefits, although anti-interventionists will argue that any price is too high.

Target’s Fall 2009 Marketing Push…the right tactics?

Here are some thoughts from a recent Retail Wire panel discussion of Target’s marketing plans for Fall 2009. The company is ramping up its ad spend, but the issue is whether to push the price-competition comparison with Walmart or to refocus on Target’s key brand positioning. My take:

Target has made a lot of smart moves in the past year, but the question is when they will pay off in better comp sales. They have successfully managed costs and inventories through the recession, they have responded where appropriate to the Walmart price juggernaut, and they have started to put more focus on traffic-building food and consumables.

Nevertheless, the Target brand is still perceived as more “aspirational” than Walmart, which is the appropriate positioning. However,  until cash-strapped consumers start spending more on the kinds of discretionary products that Target sells (apparel and home goods), the retailer will continue to lag behind Walmart. Perhaps some of the higher ad spend this fall should be focused on the businesses that will continue to be Target’s long-term strength.