Archive for December, 2012

An early take on holiday 2012 sales

RetailWire panelists had a chance right after Christmas to provide an early post-mortem on holiday 2012 sales. (And “post-mortem” may turn out to be the correct phrase.) We’ll know more when stores report December comps on January 3rd, but the initial consensus is one of disappointment. Here’s my recap:

The NRF (not cited in the article) continues to stick to its overly optimistic forecast of over 4% gains, but the rest of the numbers suggest otherwise. I predicted increases in the 2-3% ranges based on BTS sales and the consistent but modest gains all year. If the numbers turn out to be flat, it’s a big disappointment — especially with two extra selling days this year between Thanksgiving and Christmas.

When stores start reporting comp sales next week, they will cite a variety of reasons: The lingering effects of Hurricane Sandy (which may have helped DIY store but nobody else in the region), the “fiscal cliff” issue (which looked like “noise” until the last critical weekend before Christmas), and the terrible events at Newtown. But the numbers are still disappointing given the overall upbeat economic forecast and the amount of newness in stores this season.

The next big challenge to retailers will be how quickly they can liquidate seasonal goods. Some serious cold weather since mid-December will help, but stores that I visited even a week ago were still loaded with more coats and sweaters than they need. Long-term, however, apparel retailers need to figure out how to combat the move toward electronics gift-giving (with tablets and phones continuing to drive sales this year).


The risks of localized pricing

The following brief comment was in response to a RetailWire discussion (and a Wall Street Journal article) about new kinds of “pricing discrimination.” In particular, more and more stores and websites are pricing differently based on consumers’ location — in some cases, charging more for products in less affluent locations. I see some clear risks in this strategy:

In the ongoing tug of war between retailers looking for “pricing power” and consumers empowered by technology, I would not bet against the customer in the long run. “Pricing transparency” is a growing concern for retailers, but localized pricing tactics as described in the WSJ story have a good chance of backfiring.

Retailers add free WiFi: Is this a big deal anymore?

Today’s RetailWire discussion focused on the number of retailers (Target, JCP, others) rolling out free WiFi in their stores. Most panelists don’t see this as a game-changer any more, compared to “early adapters” like Nordstrom and Macy’s. Here’s my point of view:

I agree with my fellow panelists: It’s a clear incentive to stay at a hotel where wifi is free, instead of another hotel with excessive charges, because the guest assumes plenty of usage during an overnight (or longer) stay. On the other hand, a shopper may spend 30 minutes at JCP, Target or wherever with a clear purchase mission in mind.

Offering wifi becomes a “nice to have” benefit but hardly something that is going to affect purchase behavior. On the other hand, using an app like Shopkick to engage the consumer with a smartphone when she is already in your store is becoming an essential tactic.

Are “just good enough” managers good enough?

A brief RetailWire comment about whether retailers should fire their managers who are simply “good enough” but not any better. I raise a different question in my blog entry…can these managers be elevated from “Good to Great” (to borrow a cliche) with the right kind of leadership, training and best practices? I believe so:

The more relevant question — especially for a chain retailer with multiple locations — is whether the company’s training and policies are also “just good enough.” Are the management tools and professional development in place that might allow good managers to become better, in order to weed out the truly mediocre (or worse)? It’s a fair question, especially if your company is loaded with “just OK” performers.

Amazon starts to raise the white flag on state sales taxes

A brief comment (below) from RetailWire about Amazon starting to collect sales taxes in purchases in some states. The question under discussion is whether Amazon is giving up a key tactic by agreeing to charge consumers. I don’t think so, and here’s why:

Other panelists make a valid point about Amazon’s ability to “trade off” between sales tax collection and building a stronger infrastructure. But the sales tax differential was never the “sustainable advantage” for Amazon in the first place. It started with competitive prices, broad assortments and great execution — and Amazon has only gotten stronger as its reach grows into other businesses.

Dollar General lowers prices (and a simple explanation)

In a recent RetailWire discussion, most panelists agreed with me that Dollar General is lowering prices for pretty basic reasons of capturing market share and driving store traffic. The thought that “fiscal cliff” coverage is upsetting their consumer is, frankly, a stretch. Here’s my opinion:

First, I don’t believe that constant coverage of “the fiscal cliff” on the cable news and business channels has a strong impact on the shopping behavior of dollar-store consumers. It’s generally agreed that any increases in tax revenue are going to come from higher tax brackets, closed loopholes and fewer deductions — whenever such an agreement is reached. (And the separate discussion about luxury retail suggests that these expectations are already “baked into” the behavior of higher-end shoppers and the equity market.)

So there is a simpler explanation: It’s more likely that Dollar General is lowering prices in response to its discount and other dollar-store competition, and in an effort to drive traffic and market share before the holidays.

Vendor-retailer relations: How important is “making nice”?

A brief comment from a recent RetailWire discussion about vendor/retailer relations. The question is whether both sides need to strive harder to “smooth out” bumps in the relationship…my opinion is more mixed:

Not all suppliers are equally easy for retailers to work with, and it doesn’t pay to put too much value on a smooth relationship all the time if both sides are in it for the long term. The smart retailer will acknowledge that he or she has more influence than the vendor in some partnerships, and less in others. It’s important to understand the “balance of power” — for example, a hot designer brand willing to sell your store exclusively may at first have the upper hand. It’s equally important — although a cliche — for both sides to pursue “win-win” outcomes, even though getting there may strain the personal ties between retailer and vendor.