Archive for January, 2013

Will a revamped promotional calendar save JCP?

JCPenney recently announced a couple of tweaks to its “Fair & Square” pricing policy. First, JCP plans to reticket merchandise throughout the store with EDLP comparisons to manufacturers’ suggested retails. Second, Penney plan to add more targeted sale events in 2013. This triggered an outpouring of comments (mostly negative) on RetailWire; here’s my opinion:

Ron Johnson: “Our sales have gone backward a little more than we expected”? Understatement of the year. Yes, it’s possible that JCP will start to demonstrate a positive comp sales trend in 2013, but part of the reason is the hugely depressed base from last year.

It will take more than the “targeted promotions” (such as 20% off Fine Jewelry for Valentine’s Day) or the new ticketed price comparisons to “suggested retail” to return JCP to relevance. And it’s a double-edged sword: Penney is trying to regain the core customer that through sales promotions, but she is not likely to appreciate the transformation of the store into a collection of trend shops like Betseyville and Cosmopolitan, staffed by associates with handheld checkout devices.

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Does Barnes & Noble even need bricks & mortar?

RetailWire panelists commented this week on B&N’s announced wave of store closings over the next several years. This raises the question of whether Barnes even needs a brick-and-mortar presence. I argue that it’s essential to B&N’s brand identity:

Without brick-and-mortar stores, Barnes & Noble doesn’t have a future. There are simply too many other top-of-mind places to buy e-books (Amazon of course, but also Apple) for B&N to keep any sort of meaningful share without a physical footprint.

There is some evidence that bookstores’ business is starting to revive, at least for some independent booksellers. If the only company with a national presence can’t figure out how to compete, who can? And if weeding out some unproductive locations helps B&N survive, it’s a good move.

The loyalty debate continues

In a recent RetailWire discussion about food retailers, the panel debated whether newly developed mobile apps are good substitutes for traditional “loyalty card” programs. I applaud the technology but not necessarily the end result:

A mobile app that serves as a substitute for scanning a loyalty card (or entering one’s phone number at the checkout lane) is a convenience but not a game-changer. And, as the panel discussed last week, offering discounts through new technology is not really a driver of loyalty anyway.

It would be interesting to see a food retailer really prepared to think outside the box of convenience: For example, how about entering your grocery list from the store website or mobile app, scanning your barcode upon arriving at the store and finding your order ready for pickup? This would take work to execute in a cost-effective way but might help redefine loyalty.

Target introduces six new e-commerce brands

On today’s RetailWire discussion, panelists debated why Target is introducing six new product lines only on target.com. My sense is that something bigger is going on here:

While the six new brands will draw traffic, buzz and (hopefully) sales to the website, I wouldn’t assume that they are slated for e-commerce forever. It’s worth noting that five of the six brands are “home goods” in an area where Target has lost some cachet. (It’s also worth noting that Bed Bath & Beyond’s acquisition of World Market points toward a “multicultural” approach to this business.) It would not surprise me to see the test results of these brand introductions end up with at least one or two expansions to bricks & mortar, after Target evaluates the risks and rewards.

Do most loyalty programs actually drive loyalty?

A provocative discussion at RetailWire based on NRF findings about store loyalty programs. (My comments follow.) The question up for debate is whether “loyalty programs” as most stores define them really drive true customer loyalty or merely price incentives:

The biggest hurdle is the tendency on the part of many retailers to confuse price incentives for loyalty. These kinds of programs — the Target REDcard, for example — may drive more frequent store visits and even higher customer satisfaction. But it takes an emotional leap to move the consumer from satisfaction to commitment. This requires the sort of long-term brand building that too many retailers are unwilling to do, especially on the brick-and-mortar side of the business.

OfficeMax opens “shops within stores”

From a recent RetailWire discussion: Panelists argued the merits of OfficeMax “managing” the office supply section within other retailers, such as grocers. I think it’s a smart move in light of the mature “big box” model that OfficeMax and others are dealing with right now:

This idea takes category management to a new level by putting it in the hands of a second retailer. But in a sense, it’s not a big leap from the OfficeMax strategy to the “shop-within-a-shop” concept from brands like Apple (inside Best Buy) or Coach (inside Macy’s). There is some risk of cannibalization for OfficeMax but in total it’s a winning strategy to gain share. Given the big box stores’ problems squeezing productivity out of their “category killer” real estate, this is a good move.

“Keep it simple” is not stupid

The recent NRF convention gave RetailWire panelists plenty to talk about. The following comment pertains to the issue of “simplicity” as a way to manage assortments and promotions more effectively:

“Keep it simple” is usually (but not always) a good philosophy, whether it applies to assortment planning, branding and sales promotion, or other elements of the retail mix. One exception to the rule: JCPenney, where the effort to simplify the pricing message was communicated and executed poorly with well-known results.

It’s no accident that some of the best-performing retailers (from Aldi to Costco) are working on a much narrower SKU base than many of their competitors, making the store experience and supply chain process both more efficient. And it’s also no accident that many of the retailers with the best results in 2012 preached “simplicity” in their pricing message, from high-end retailers like Nordstrom to the off-pricers continuing to gain market share from promotional department stores.


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