Independent retailing: Tougher than ever?

A fellow RetailWire panelist started a discussion about an acquaintance starting a small retail business without adequate funding or development of a website. She raised the question whether independent merchants are facing tougher obstacles than ever. My take:

The challenges facing small retailers (and large retailers, for that matter) have not really changed over the years. The following questions make sense today and would have made sense 30 years ago:

1. Do I have a clearcut merchandising strategy and point of difference?
2. Do I have the appropriate location for my business?
3. Do I have a marketing plan that will drive profitable sales?
4. Do I have access to financing, and to vendors who will partner in my success?

The questions remain the same, the differences are driven by technology (the need to use e-commerce and social networking) and changing demographics. Financing to support growth is a critical need for any retail business model…making it all the more vital to have a compelling plan.

Lessons from the management shakeup at JCP

The dismissal of the head marketer/merchant from JCPenney is the latest development in a saga that has JCP competing with Sears for most discussions on RetailWire. (And this is not a badge of honor.) Here’s my point of view:

It’s premature to write off the JCP pricing strategy only five months after its introduction. But it was an obvious tactical error to focus most of JCP’s national advertising on Target-style “image building” instead of pushing the “Fair & Square” pricing concept more clearly. Even the ads intended to explain the policy were too cute by half, with none of the “call to action” needed to drive traffic to the store.

Mr. Francis’s departure raises some deeper questions:

1. Is there a serious dysfunction inside the JCP team that has been masked by Ron Johnson’s upbeat presentations at investor meetings?

2. Can the company CEO successfully turn around JCP’s merchandising and marketing by himself, at the same time that he is focused on reinvention of the store experience?

3. For that matter, doesn’t JCP need a separate head of merchandising and head of marketing given the magnitude of the company’s challenges?

This looks like two classic marketing mistakes: First, focusing on re-branding the company image instead of “selling” the pricing policy. And, second, running thse image ads before completing the task of reinventing the merchandise content and store experience.

Speaking of showrooming…

“Showrooming” (the consumer behavior of shopping product in a store and searching/buying it on their smartphone from another retailer) is a hot topic. A recent RetailWire discussion focused on ways to combat the trend. Here’s my take:

Perhaps the most important reason for showrooming isn’t included in the list. Stores need to be more proactive about building their assortments and (when possible) making sure that their products are exclusive, rather than goods that can be easily compared on Amazon or other e-commerce sites.

Stores can also be proactive by using location-based technology more aggressively. Figure out how to reach a customer on his or her cell phone via text message with special incentives when they are in your store. And by all means have enough sales associates to prevent consumers from simply walking out the door.

Here’s to the hands-on shopping experience

The following comments from RetailWire shed some light on The Apple Store shopping experience. The well-designed way in which shoppers are encouraged to interact with the merchandise is something a lot of other retailers can learn from. It’s one clear way that retailers can combat the growth of “showrooming”:

Car dealers figured out a long time ago that shoppers are more likely to buy after a test drive. So it doesn’t take a moment of genius to figure out that the same principle will apply in the Apple Store. The only surprise is the failure of competitors to provide the same sort of interactive experience, because the benefits are obvious.

Aside from the interactive environment of the Apple Store, the simplicity of the process is another loyalty-building strength. I bought a new MacBook Pro for my college-age daughter last week — because she knew what she wanted (not the retina-display model, thankfully), the Apple sales associate made the entire process as efficient as possible. He was absolutely focused on our satisfaction even in the middle of a very busy store.

What’s the point of consumer surveys?

From a discussion at RetailWire about the ubiquity of consumer surveys — and the apparent lack of followthrough action:

Given the popularity of online surveys, George Anderson’s column raises the question of what happens to the survey results. Do they filter down to the buyers or store managers who have the authority to take action? Or do they fall into a “black hole” of data collection?

However, it’s important to keep in mind that the survey data must represent some sort of consensus before an individual customer can expect action to be taken on his or her requests. Sometimes the best assortment planning represents the “art of saying no.”

The 800 pound retailer

Interesting discussion at RetailWire, debating the premise that large retailers’ sway over their suppliers is exaggerated. I was one of several panelists who questioned the source (and objectivity) of the research:

I think it’s worth considering the source of these findings: The Sam Walton College of Business at the University of Arkansas. There is some validity to the idea that supply chain efficiency benefits the supplier as well as the retailer, but it’s disingenuous to suggest that big box stores have less leverage than their vendors. It’s well known that Walmart, in particular, has pushed its vendors hard to take costs out of the product and the “process” for many years. Nothing wrong with that, but let’s be realistic about who is driving the cost savings.

Building trust through your return policy

George Anderson is a frequent contributor to RetailWire, and he started a discussion recently about the value of stores’ liberal return policies and why this is becoming a more important positioning tool. I have a few thoughts on the subject:

Like George’s experience at Target, Kohl’s has been known for hassle-free returns for many years and now JCPenney is making it a centerpiece of its brand reinvention. (Although when JCP’s key competitors are already known for it, hassle-free returns aren’t a very distinctive positioning tool.) It’s clearly something that resonates with consumers, and online retailers like Amazon have raised the bar on this element of customer service.

JCP: “Every day is a sale day”?

It’s clear that JCP management is revisiting its promotional stance after its tough Q1 results. They added a “Best Price Friday” sale event to kick off Memorial Day weekend and are apparently considering other events, especially for Black Friday. And the June TV spots now feature the tag line, “Every Day is a Sale Day at JCP.” But what, exactly, does that mean? That the “fair & square” prices really aren’t the right prices?

JCP finds itself in a bind: Do nothing, and continue to watch sales collapse at a faster pace than expected. Do something reactive only four months after kicking off the strategy, and risk confusing the consumer even further. I’ll say it again: It was worth getting the content and store redesign right before tackling a new pricing strategy and Target-style ad campaign, not after.