Archive for August, 2011

Hire from outside, or promote from inside?

I know the following comment (from RetailWire) somewhat contradicts my earlier post about a new head of Apple Store. But it’s my blog so I’m entitled! My real point: It depends on the situation, the company and the skill set being sought:

The debate between “promoting from within” and “hiring from outside” goes back for many years. A healty outcome involves both approaches: Insiders are likely to have a better understanding of the company culture and legacy (especially if it’s successful) and their promotion gives other insiders a clearer sense of a career path in the organization. On the other hand, outsiders are likely to bring a fresh perspective and new “best practices” to an organization, especially (in the case of JCPenney, for example) if the company needs to be shaken up.

Perhaps the more important debate is the nature of the outside hires’ backgrounds. As the article suggests, it may be less important to bring traditional retail expertise to another retailer and more important (especially at the CEO level) to have supply chain, marketing or IT experience. The smart CEO will ensure that the direct reports running stores and merchandising have the knowledge base that he or she may lack.

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Outlet malls thrive in a slow economy

From a recent RetailWire discussion of outlet malls and why the concept continues to grow in today’s sluggish economy…I feel a lot of their success is because the concept continues to evolve. Here’s my take:

There are at least three trends that will continue to drive the growth of outlet malls. First (as the article points out), there is plenty of space on the map to add outlet malls in underserved markets. Second, consumers continue to look for value, especially among the national brands front-and-center in a typical outlet mall. Finally, the outlet mall is redefining itself by adding more upscale tenants, big box retailers and even (in the case of Gurnee Mills north of Chicago) a department store tenant when Macys opens its doors next year.

 

Commodity prices: What’s the solution for retailers?

With commodity prices such as cotton wildly fluctuating, it’s hard to know how to respond if you are a retailer or vendor. Here’s my comment, recently posted on RetailWire:

It’s difficult to expect consumers to accept higher prices on clothing after years of flat-to-deflationary prices. One retailer recently reported a direct causation between price increases and falling demand: For every 1% price rise, they saw a 1% drop in units sold.

Retailers and suppliers are going to have to work harder than ever this fall to maintain retail prices. They may need to take cost out of a garment by using more manmade fibers, and they definitely need to find savings in sourcing and supply chain management. But in an atmosphere of high economic uncertainty, raising prices is a recipe for losing market share.

 

A&F, what’s the situation?

Abercrombie and Fitch garnered lots of publicity when they asked the cast of “Jersey Shore” to stop wearing their clothes. Is this a case of protecting brand image or simply headline-grabbing? Here’s my opinion from RetailWire:

It’s hard to know whether this is a publicity stunt on the part of A&F or an attempt to protect its brand image. If it’s the latter, the unintended irony is rich. A&F long ago gave up its original “country club” brand association and invented a new apparel genre: “sleazy prep.” This is the store that has successfully sold sex as part of the brand image, through its catalogs and its continued use of bare-chested sales associates. Maybe A&F feels the Jersey Shore image is more compatible with Hollister, or maybe it’s time to invent a new store concept!

 

Whole Foods chickens out after protests

Quite a discussion recently on RetailWire about Whole Foods. In this case, the food retailer offered an expanded assortment of halal foods but backed away from the appearance of “promoting” Ramadan after the ill-informed protests of a small minority of consumers. Most panelists agreed with my point of view:

Whole Foods’ best reaction would have been no reaction.¬†Whole Foods was not “celebrating” Ramadan but merely creating awareness of halal foods during a seasonal opportunity. (And, as he also pointed out, no different from building a stronger presentation of Passover-themed foods at the right time of year.) For a company that has built its marketing platform on being more enlightened than the competition, this is an inappropriate response to a vocal minority.

 

You’re in good hands with Walgreens?

One of many RetailWire discussions about new strategic initiatives at Walgreens. This time, it centers on their plan to enter the health insurance market, whether as a “clearinghouse” or as a provider. Here’s my opinion:

I have mixed feelings about this, assuming Walgreens wants to provide a “portal” for consumers to shop from providers like Aetna and Humana rather than underwriting policies itself. On the one hand, this move would strengthen Walgreens’s reach into all things health-care related (along with its acquisition of drugstore.com earlier this year). On the other hand, Walgreens still has a lot of work to do in order to bring greater health-related focus to its brick-and-mortar stores. (Not to mention, making the sorts of physical upgrades you can see at remodeled Duane Reade locations in Manhattan.) Will insurance be a distraction or a reinforcement of the mission?

 

Change comes to Apple (part 1)

Before the more recent (and sad) announcement about Steve Jobs stepping down as Apple CEO, RetailWire panelists weighed in on succession planning at the retail division. In particular, is the company smart to hire a non-retailer to replace Ron Johnson? Here’s my point of view:

Apple may feel that its business is at a global “tipping point” requiring an executive with international expertise. However, I’m surprised that the search isn’t starting inside the company. It’s vital that somebody running the retail operations “gets” the Apple culture of innovation and works as hard as Ron Johnson did to make the stores a branding tool for the company, not just a place to sell goods. If Apple doesn’t have somebody in position to advance, shame on them especially after years of speculation about Mr. Johnson taking another job in retail.

 

 


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