Archive for February, 2010

Target vs. Walmart on price: Worth the effort?

Today’s RetailWire panel discussion centers on Target’s stated desire to get more credit from its customers for being price-competitive with Walmart. This issue seems to come up frequently, because Target has trouble having it both ways. If it is aiming to be the “aspirational” retailer, does it matter whether it price-matches Walmart across the board? Here’s my point of view:
Target is walking a fine line: Can it improve its value positioning vs. Walmart while being true to its own image? It’s possible that the 90% of Americans who are employed feel more secure about their economic prospects than they did a year ago — there is evidence in consumer spending on the home — and are willing to trade back up. So Target’s biggest opportunity for a win is to be true to its longtime brand position as the leader in value-priced but well-designed family apparel and items for the home.
It’s important to be price-competitive on commodity businesses but Target has to be careful not to expend too much effort or brand equity doing so. The retail landscape is littered with former competitors of Walmart who tried to compete strictly on the basis of price.

Vudu acquired by Walmart

A lot of diverse opinion on RetailWire about whether Walmart made a smart move by acquiring Vudu, a “digital delivery” service for movies and other content. I think it’s a smart move, at least to help Walmart become a player in the category:

Walmart already recognized the power of e-retailing by taking on Amazon more aggressively in the past two years. Now they see a clear future in digital delivery of entertainment as an alternative to rentals or even sales of DVDs and even video games. However, Netflix has a big head-start in this field and has positioned itself (through its marketing, not just its online capability) as the brand to beat. Apple clearly has a horse in this race, too, with the growth of digital delivery to its iPhones and iPads. But — bottom line — this is an important move for Walmart if it wants a serious foothold in the category.

Madonna meets Macy’s?

RetailWire panelists have had plenty of chances to weigh in on the trend toward exclusive brands. The latest discussion focused on a possible tie-up between Macy’s and Madonna, crossing from apparel into several other categories. Here’s my point of view:

Madonna had vast influence on fashion and popular culture in the ’80s…but the question is how her iconic status would translate into a design point of view. The brand position should be “contemporary” but the age demographic is frankly not going to be as young as Macy’s might prefer. It’s certainly an idea worth exploring; many of Macy’s marketing initiatives and exclusive brands are celebrity-focused, and a “Madonna Collection” would fit right in.

Sears Holdings exploits its auto repair business

Sears Holdings seems to be in a new phase of its business strategy, in which it is leveraging key assets for growth outside of its traditional brick-and-mortar stores. RetailWire panelists recently discussed the brand equity of DieHard, Craftsman and Kenmore…and how Sears can exploit these properties more aggressively. Here’s my opinion as it relates to a proposed rollout of auto repair stores:
Perhaps a smarter idea than Sears Auto Centers would be “DieHard Auto Centers.” Panelists noted this week that Sears is making a smart move selling one of its core product lines to other retailers, because DieHard still has brand equity — along with Kenmore and Craftsman. (Come to think of it, selling Craftsman tools to a group like Ace or TrueValue would be another win.) To David Livingston’s point, the Sears name itself is not as credible as it used to be. Bottom line: Sears Holdings continues to show that it’s more interested in leveraging its brand properties than in actually turning around its retail stores.

Does “truth in labeling” drive restaurant sales?

There has been a lot of discussion lately (including the following comment on RetailWire) about whether restaurants and fast food outlets can help or hurt their sales by being more upfront about calorie and fat content on their menus. Here’s my take:

There is no harm done in improving “truth in labeling” in restaurants and fast-food stores, but the long-term benefits may take years to determine. As the article points out, calorie labeling may drive sales from one menu item to another but may not reduce the overall consumption of fat, calories and sodium. This relates to the recent discussion about the “Taco Bell diet” — several menu items are being marketed as lower in fat and calories, but are consumers simply buying more of each item?

There is a bigger issue on the horizon: The “truth in labeling” on food packaging. Most serving sizes are unrealistically low compared to what people actually eat, providing a misleading perspective on consumption. While nobody is eager for the heavy hand of the government, some more accurate information on food labels would at least allow consumers to make their own decisions with better information.

Macy’s e-commerce efforts paying off?

I recently commented (via RetailWire) about Macy’s apparent success driving sales through its website. Here’s my observation:

Macy’s has been very aggressive in the past year about using e-commerce to drive sales to its website as well as its stores. I received several e-mails per week about free shipping and other offers intended to drive traffic to their site, and I also found that their assortment is much broader and deeper than some of their traditional department-store competitors. So it’s not surprising that Macy’s is seeing results from its efforts…the only surprise is the number of competitors who haven’t caught up.

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.