Archive for February, 2011

Comeback of the regional mall?

From a recent RetailWire discussion about regional malls’ share gain from 2.4% to 2.5% of spending (2009 to 2010). I don’t see it as a trend so much as a statistical aberration:

I don’t think a .1 percentage point gain is cause for celebration. Let’s see whether this is the beginning of a long-term trend or a blip in what has been a longstanding loss of market share. I do think that healthy regional malls have been working harder to re-engineer their tenant base with more successful specialty stores in recent years to offset growing vacancy rates, and have also added more dining and entertainment options for shoppers. But the traditional “mall anchor” (with the exception of Macy’s) continues to lose share to specialists and value-oriented retailers…and as long as that trend continues, regional malls can’t expect a dramatic turnaround soon.

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Should sales associates use smartphones on the job?

A provocative article by fellow consultant Doug Fleener triggered a huge response on RetailWire. The question: Should sales associates be permitted to use smartphones on the job? And (if not) how does store management wrestle with this growing issue? My opinion:

Unless cellphones and other “smart” devices are being used to help customers or drive sales (e.g. calling another store, checking for inventory availability online), they should be off limits for sales associates. What Doug describes is another example of “bad manners” creeping into everyday life. All of us have fallen victim to smartphone users checking e-mail, etc. during meetings or social occasions where the unspoken messsage is, “I am more important that you are.” (Or we’ve been guilty of the same behavior ourselves.) If retailers take the position that customers or browsers are invited guests, and train their sales associates accordingly, this sort of breach of etiquette — and bad business move — can be avoided.

Will Borders survive reorganization?

There is a Borders about five minutes from my house and it’s one of three stores being shuttered here in the Milwaukee area. Based on my own shopping patterns (especially since I bought a Kindle about 18 months ago), it’s hard to see how the traditional brick & mortar bookseller will survive without this sort of consolidation.

The big winners short-term are Barnes & Noble (in this trading area, about four miles away) and a local independent bookseller (about three miles away in the other direction). But the lesson learned is that the demand for printed books is simply too tenuous to support three competitors in a 10-mile radius, even with a high density of affluent, educated readers. What looks like a short-term benefit to B&N should really be interpreted as the writing on the wall.

As to Mr. Ackman’s declaration (within the last 2 weeks) that Borders would not have to declare Ch. 11 bankruptcy…right now his track record investing in retail looks pretty similar to Eddie Lampert’s. If I were on the board and management team at JCP, I would take whatever he says with a grain of salt.

EDLP the right response to consumer empowerment?

RetailWire panelists recently discussed an article about Best Buy considering a move to “everyday low pricing” (EDLP). Apparently this change of heart is triggered by the growing number of customers armed with smartphones (and more knowledge about comparative prices) when they walk into the store. My point of view:

Unless Best Buy’s EDLP pricing will be consistently the lowest prices in the marketplace (always a tough thing to accomplish), I don’t see this strategy overcoming the “smartphone” dilemma. Consumers will be just as capable of price comparisons vs. Walmart and other competitors, whether Best Buy is following a high/low or EDLP strategy. The bigger question — regardless of pricing strategy — is whether Best Buy can maintain its edge by focusing more sharply on growth businesses like tablets and smartphones with the breadth of assortment and quality of service that they are known for.

Succession planning at Men’s Wearhouse

From a recent RetailWire comment about the “changing of the guard” at Men’s Wearhouse:

I’d like to think that Mr. Zimmer’s successor has been instrumental in building the company over the past 16 years, and has also had plenty of time to absorb (and put his stamp on) the company culture. Given this fact, odds are good that there will be a smooth transition. Only curious part of the remarks: That Mr. Zimmer already has his eye on the new CEO’s successor! Maybe less than a full vote of confidence, after all.

Impulse shopping a thing of the past?

RetailWire panelists commented recently on survey data where consumers reported “sticking to a list” in the grocery store and doing very little impulse buying. I joined most of my fellow panelists in being skeptical:

I’m not buying it (so to speak)…the methodology behind this survey appears to be based on self-reported instead of actual behavior. It would be interesting to observe actual in-store shopping behavior and (in particular) to compare the contents of the shopping cart to the list in the shopper’s hand when he/she reaches the checkout lanes. I do believe a high proportion of shoppers do their food shopping with a plan (or list) in mind, but I also believe that one or two unplanned items make it through the scanner. This reminds me of the surveys that panelists discussed before the holidays, which certainly pointed toward a grim season for retailers based on self-reported “intention to buy” versus actual behavior.

Target puts a bullseye on Canada

My point of view (from RetailWire) about Target’s announced plans to expand aggressively in Canada:

While operating north of the border will have its challenges, this looks like a great move for Target. It has an opportunity to cherry-pick most of the Zellers sites, and it will end up with a very productive portfolio of stores. There is definitely a niche for an upmarket discounter like Target in Canada, since Sears occupies a more upscale brand position than it does in the U.S. and there is very little mid-market competition. (It’s also a good preemptive move vs. other U.S. retailers considering expansion to Canada.) Execution will be the key to Target’s success — not just its usual strong brand positioning.


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