Black Thursday, anyone?

Once Walmart announced its plan to open at 8pm on Thanksgiving evening, plenty of commentary on RetailWire followed. Here’s my take:

I think the horse was out of the barn on this issue (so to speak) last year when Walmart decided to open at 10pm in the first place. Opening two hours earlier (and getting competitors like Target to follow suit) was inevitable. The only question now is whether these stores will start to open during “regular” hours on Thanksgiving Thursday and perhaps stay open all night — if they don’t already.

Whether this drives incremental sales is debatable, but there’s no debate about a serious fight for market share going on. As to the sanctity of Thanksgiving as a family-centered holiday — and the concept of Black Friday itself — those ideas are sadly starting to look quaint.

JCP’s 3rd quarter results: The beat-down goes on

Since JCP released its 3rd quarter earnings last Friday, there has been plenty of commentary about the worse-than-expected sales trend, gross margin performance and operating losses. There isn’t much that I can add except to point out that JCP will give back between $3 and $4 billion in sales in 2012…and it didn’t need to be that way.

JCP could have pursued a less promotional strategy that still involved some sale events (like Nordstrom, for example, or maybe more frequent), and the losses in sales (let’s assume in the 10% range) would be a lot easier to understand and to swallow. The management team would buy itself more time to execute the rest of the strategy (new shops, new brands, etc.) without bleeding cash.

Instead, Ron Johnson and Bill Ackman (his lead investor) are trying to find new ways to spin the results. Now they are talking about the “old JCP” and the “new JCP,” holding out the promise that the revamped company can produce twice the sales per square foot vs. the current model. Here’s the problem with that theory: If you assume sales today of $135/ft. (based on 2012 volume of $13 billion, I guess) and future sales of $275/ft. (those are the numbers being thrown around this week), you also need to assume that JCP will be a $25 billion company when this is all over. (Or it will have to shed a huge amount of square footage.) Does anybody buy that?

JCP: What’s happened to the pricing strategy?

Many of JCPenney’s loyal customers have missed the regular couponing and special offers that used to be part of the marketing mix. This was the exact promotional strategy that was ended with great fanfare at the start of 2012 by Ron Johnson and his new team. One of JCP’s missteps was the failure to explain the new/simplified pricing structure clearly in marketing vehicles or in-store.

The costs of this mistake are well-documented, with JCP taking on water at a fast pace. Its comp sales have declined so quickly — and its operating losses have grown so fast — that the viability of the long-term strategy is at risk. New brands and shops, new technology and a reinvented store experience are hard to execute with the headwinds of 20% sales decreases.

Meanwhile, JCP cardholders (like this writer) have received two “gifts” from Ron Johnson and team in the past month: Coupons good for $10 off any purchase of $10 or more. (The first one arrived via e-mail, the second one via snail-mail.) At the same time, JCP is advertising an additional 30% off “clearance” prices, which were originally being marketed as “best prices.”

I assume the second “gift” arrived because the first offer worked, and the JCP team is at least trying to be flexible. But this raises a couple of key questions: First, how is that 20% decline in sales working out for the company’s bottom line? And, second, is this the beginning of the end for the “fair & square” pricing strategy?

Time for a team meeting at Apple?

The dismissal of two key execs at Apple this week is the subject of this RetailWire posting:

The problems at Apple point out Steve Jobs’s failure to develop a true succession plan even though he knew his health was in jeopardy for years. Tim Cook has been operating in Jobs’s long shadow for the past year but appears finally to be taking control of the company. This starts with his management team, and by confronting the dysfunctional egos that made major missteps with the iOS 6.0 launch and The Apple Store.

As to Ron Johnson, I wouldn’t be so quick to credit him (and blame his successor)…The Apple Store is clearly a product of Steve Jobs’s vision as much as Johnson’s operating skill. JCP has been more than a match for Johnson’s management talents so far.

Hurricane Sandy: What effect on the economy?

From RetailWire, some speculation earlier this week about the effects of Sandy on the retail industry. (The first comment, below, discusses ways in which retailers and service providers can provide much-needed relief to customers right now.) Here’s my take:

Second question first: Altruism is good business as well as the right thing to do. It becomes an easy decision for retailers and service providers to offer help to people in need…including their own customer base. I heard Danny Meyer discussing being able to open his upper Manhattan Shake Shack locations — in order to distribute free food yesterday — even though his downtown restaurants are closed for the immediate future.

As to the effects on the retail industry, Sandy’s effects and footprint are so huge that there will absolutely be an impact on short-term sales as well as logistical issues. Longer-term, the biggest benefit (as usual after an event like this) will hit the sellers of food, “necessities” and home repair products.

Holiday 2012: Reason for optimism?

Nobody has a crystal ball about 4th quarter sales increases — especially with a Presidential election and hurricane recovery going on — but here’s my take. Today’s release of October sales underlines the general mood of optimism:

I look for modest increases, but lower than some of the 4% gains in the article. (More like 2-3% is my number.) Macroeconomic conditions are improving and there is usually a relief factor after the uncertainly of a close Presidential election. (Unless we have a repeat of 2000!) And individual stores’ numbers — like some of the players in the women’s apparel space — are improving, too.

That being said, there are a couple of wild cards: First, how much will the recovery from Hurricane Sandy hold back retail sales in the Northeast, especially for non-essential goods? Second, will we see a repeat of the “gadget Christmas” of the last few years, driven by dropping prices on tablets instead of other discretionary merchandise?

Does Best Buy belong in the tablet business?

From RetailWire, where the discussion centers around private-brand tablets (like Dynex or Insignia) at Best Buy. I think there’s a place for this kind of merchandising, even in the increasingly crowded marketplace for tablets:

To some degree, tablets are displacing not only desktops and laptops but also TV’s. It’s not news that consumers watch movies on tablets, but consumption of TV series and other cable content is growing rapidly. So Best Buy needs to get into the game, just as they carry a credible assortment of private-brand TV’s under the Dynex and Insignia labels. I agree with the assessment that $199 (not $250) is the magic price point — otherwise, why not buy a Kindle Fire or other branded tablet?

Target wishes you a happy holiday…in October?

Here’s the annual debate (from RetailWire) about “how early is too early” to start advertising Christmas and holiday merchandise. This year, Target is ahead of the pack, and I consider their move defensible:

There are plenty of big-box competitors already advertising their holiday toy departments, and Target — with a big investment of space and inventory in this business — can’t sit on the sidelines. The early holiday advertising has the added benefit of pushing the price-matching message. What worked in 2010 may not be the right tactic for 2012, if consumers are prepared to shop earlier for most-wanted items on their list…and if Target is prepared to capture market share as a result.

Netflix continues to stall

From RetailWire, a recent comment about Netflix — a company staking its future on video streaming but facing increasing (and more nimble) competition:

Netflix is the “big box store” of video streaming, and I would equate competitors like Apple and Amazon with “warehouse clubs” in the business of selling multiple categories. And Netflix continues to struggle with poor selection of movies and video compared to its bigger, more nimble competitors. If you want to catch up on season 1 of “Homeland,” good luck with Netflix — I am doing my viewing on Amazon Instant Video, and I’m sure they are glad to collect more revenue and data from me.

Does the “Geek Squad” have legs?

A brief RetailWire comment (below) about Best Buy leveraging its Geek Squad concept — first at Target, now on eBay:

I was a skeptic about the Target deal, because Best Buy is helping to chase customers out of its own underperforming stores to another brick-and-mortar competitor. On the other hand, the affiliation with eBay is a smart move. It helps rebuild the “brand equity” of a key point of difference for Best Buy, and it helps drive profitable revenue for the company without depending on foot traffic in its own stores.