Archive for August, 2010

Costco moving to the mall?

Today’s discussion at RetailWire centers on mall developers like Westfield working with Costco on sites in regional malls. A good idea for both, but not without its challenges:
Mall developers are smart to think outside the box by finding new tenants like Costco and Target. The traditional regional mall of twenty years ago — Sears, Penney and two department stores as anchors — simply isn’t a viable model any more. There isn’t any doubt that big box retailers can be a significant traffic draw to the mall, even if they are “destination” stores. It certainly beats having an empty space.
The challenge for Costco is to make the regional mall model work: Is the footprint adequate in terms of interior space and parking? Does the project require demolition or retrofitting of an empty mall anchor? Do the occupancy expenses support Costco’s low-cost operating model? Plenty of opportunity for Costco, but also plenty of questions to be answered before this turns into a national growth strategy.

The future of textbook retailing: Time for a new model?

As the parent of two college students and a recent grad, I can certainly see the merits of innovative business models designed to drive down the exorbitant cost of new textbooks. And as a college-level instructor, I also encourage my students to find cost-effective ways to study the textbook that I use. (Not reading it isn’t an option.) Textbook rentals are just one option, along with several online retailers (Amazon and others) who sell new and used texts at a discount. Perhaps the biggest trend to watch for is the growing popularity of e-versions, which offer not only significant savings but also the portability of a laptop, iPad or e-reader. The “cash cow” of traditional (and overpriced) textbooks is a threatened business model, and none too soon.

In praise of Trader Joe’s

From a discussion at RetailWire about Trader Joe’s; no doubt there are “lessons to be learned” for all kinds of retailers:
I see three things that differentiate TJ’s from the competition:
1. Distinctive product development instead of “me-too” merchandise;
2. A consistent focus on value;
3. A disciplined approach to assortment planning.
The relatively small size of most Trader Joe’s stores forces the chain to make sure that every product carries its weight. And the customer is consistently — and pleasantly — surprised by the price/quality equation. These are clear lessons not only for food retailers but for every retailer trying to build a more rational and competitive private-brand model.

A new retail “golden age”? Not yet…

There is no doubt that the recession (and years of retail consolidation preceding it) have thinned the ranks of weak retailers, leaving fewer but financially stronger survivors. And there is also clear evidence that the remaining retailers are focused on new strategies to appeal to consumers, such as social networking tools and the development of exclusive brands.
Innovations like this are healthy for the retail industry, but do they point to a “golden age”? And how, exactly, do we define the “golden age”? I would describe it as a consistent, well-executed merchandise offering — priced appropriately for the store’s target customer — with service and ambiance appropriate to the store brand.

At this point the “golden age” still looks like it’s beyond the horizon; in fact, e-commerce may be closer to the goal than most brick-and-mortar retailers. Long-term aspirations to greatness may require less short-term focus on costs and margins.

Liz Claiborne: Right track or wrong track?

I take a critical position about Liz Claiborne in a recent RetailWire post:
It’s hard to agree with board member Arthur Martinez after looking at the succession of losing quarters, and the deflation in Liz’s stock price. While I agree that the exclusive with JCPenney is the best way to salvage the original Liz Claiborne brand, it will be a challenge for JCP to recapture its focus on a broad but well-targeted consumer.
The Claiborne team did face several challenges: Too many internal brands to manage, retail consolidation and big stores’ push for exclusives. But they did themselves no favors by mismanaging the core brand — and turned themselves from an apparel company into a licensing company in the process. Board members really ought to question their own due diligence over the past several years.

Piperlime Pop-up

From a recent RetailWire discussion about Piperlime and its upcoming pop-up store in Manhattan:

Pop-up stores have become a great tool for creating brand awareness and for driving traffic to retailers’ websites. And, most noticeably in the case of Target, Manhattan-based pop-up stores become precursors to successful brick-and-mortar locations. So it’s possible that Piperlime has an agenda other than simply driving website traffic and awareness: To experiment with concepts that would work in a physical store. Piperlime’s primary focus on branded shoes makes it a much different kind of business than other Gap divisions, but also provides potential future competition for DSW nationwide.

JCPenney’s “fast fashion” alliance with Mango: A cure-all?

JCPenney has found the twentysomething customer elusive in its stores, and perhaps the alliance with Mango will fill the gap. The underlying problem, as I see it, is the relentless private brand proliferation at JCP where nothing stands out. JCP introduced two new junior/kids brands for BTS…what did they eliminate? And when they become the exclusive provider of Liz Claiborne-branded apparel this fall, what will they edit out of their assortments in order to make Liz look more important? JCP will continue to pose the question, “Who knew?” in its TV ads as long as it hides its most important brands in the middle of a bunch of “stuff.”