Archive for June, 2013

Paula Deen : Bad behavior or just bad PR?

Plenty of RetailWire panelists weighed in today on the hot topic of Paula Deen. Most comments blamed her woes on “political correctness,” but I think that’s oversimplifying a situation that none of us can totally understand. Meanwhile, there was consensus that this was a PR disaster that didn’t need to happen. Here’s my point of view:

Whether or not Paula Deen is intolerant in her heart is not something that the outside world can determine. It does seem apparent that she turned a blind eye toward bad behavior in the workplace. It’s hard for her key business partners — Walmart, The Food Network, and so on — to ignore the issue.

The bigger issue is the mismanagement of the Paula Deen brand, going back at least to the non-appearance on the Today Show last week. Her eventual “mea culpa” was really a statement about her own victimhood rather than a clear apology, and it only served to speed the process of losing endorsements. I’m sure a PR professional weighing in on the topic would have advised her to be as apologetic as possible—as fast as possible—instead of displaying crocodile tears.

Walmart’s price comparison ads: Good long-term strategy?

In today’s RetailWire discussion, panelists weigh in about whether the Walmart comparison ads running in markets across the country are working or not. While most consumers are skeptical about price comparisons, the campaign appears to be driving share for Walmart. I have mixed feelings about the long-term benefit of the tactic, although it’s certainly true to Walmart’s brand positioning:

There is a lot of “fine print” (at least in the newspaper versions of the Walmart vs. Roundys ads running in this market) that would cause skepticism about the campaign. In particular, it’s hard to tell (especially in the TV spots) whether Walmart is doing an exact comparison or cherry-picking the items on both “tape totals” to slant the outcome. If you read the disclaimers, you’ll see what I mean, but there is no doubt that the campaign is working.

There are a couple of possible responses: Publix has decided to push back on the price message, while other grocery chains try to stay “above the fray” by offering better service and more specialized content. But not responding at all is a passive (and losing) tactic.

One more issue: The price comparisons may be driving share in food and consumables but do not appear to be moving Walmart’s overall sales and margins in the right direction. The focus on the lowest-margin businesses in the store may be counterproductive in the long run.

Staples tests omnichannel stores

From today’s RetailWire panel discussion comes news that Staples is testing small-format stores with a limited assortment of best-selling SKU’s but also more in-store linkage to the company’s broad e-commerce selection. It’s only a test, but it feels like a winning idea to me:

Staples will learn a lot from this test, and a lot of other big-box retailers may learn valuable lessons, too. It’s an issue of how to leverage the convenience of brick-and-mortar locations in a more productive footprint, while finding ways to compete more effectively against web-only retailers like Amazon.

I would still like to see the big box office supply stores leverage their brand equity more successfully to offer virtual business services — not just paper, printers, ink and related merchandise. Staples and OfficeMax offer links to cloud storage and web domain suppliers on its websites, but have more opportunity than they have exploited so far.

On the Sears Holdings “management team”

RetailWire started a provocative discussion among its BrainTrust panelists by headlining its article: “Should Eddie Lampert Fire His CEO?” (Referring to himself, of course.) I’ve had plenty to say about Sears Holdings over the years, and my latest comment follows:

It doesn’t matter whether Eddie Lampert carries the CEO title or not…as the question suggests, he is calling the shots. The answer is “no,” if the conventional definition of a turnaround is actual improvement in operating results, merchandising and the store experience. But none of these has been on Mr. Lampert’s agenda for a long time, while he is more preoccupied with ways to leverage the company’s assets and come up with farfetched ideas like data storage and disaster recovery. So don’t expect this picture to improve anytime soon — the only question is what’s the endgame.

Nordstrom Rack expansion is accelerating

Most of the discussion on RetailWire about off-pricers centers on TJX and Ross Stores, but attention should be paid to Nordstrom Rack too. Nordstrom is stepping up the pace of store openings and seems to have a well-differentiated formula. Here’s my comment:

Rack stores have some of the hallmarks of Nordstrom stores — plenty of “better” apparel and especially dominant shoe departments compared to the competition — but nobody would mistake the presentation in these stores for a full-line Nordstrom store. I would rank the “store experience” somewhere between a TJMaxx and an Off 5th store, where Saks has taken a more distinctive position on presentation and product development.

Rack outlet stores are an important growth vehicle as Nordstrom continues to be very deliberate in the expansion of its anchor department stores. And the credibility of the Nordstrom brand allows the outlet concept to expand into virtually any city, even those who will never see a full-line store being built.

The Best Buy turnaround: Is it real?

Some of the recent moves announced by Hubert Joly at Best Buy have caught the attention of RetailWire panelists. (The Windows partnership is in the spotlight this week.) It’s not an easy fix, but I feel that the company is on the right track:

Best Buy is in the early stages of a turnaround. It’s arguable that their stock price has overshot their actual improvement in sales (which still declined in the most recent quarter) but it’s clear that Mr. Joly is starting to address many of the company’s most urgent needs.

First, a more brand-centric approach to merchandising (with focus on key players like Samsung and Microsoft) is a smart alternative to the aimless merchandising inside those “big boxes” for the past several years. (There is plenty of space to play with, in the area now devoted to music, DVD’s and computer software.) Second, Best Buy needs a more robust omnichannel strategy — not only to make its big box stores more productive, but also as a brand positioning tool.

Loyalty programs: Is time worth more than money?

Recently the RetailWire panel  had a chance to discuss new thoughts about loyalty programs. The article under discussion focused on the value of the consumer’s time, but several of the examples were not specific. The common theme — and a growing issue in rethinking loyalty programs — is how to change the formula from just being price-focused. Here’s my comment:

The examples mentioned in the article are not always about time-saving, but they are consistently good examples of how to delight the customer by exceeding expectations. Some of the benefits are convenience-based, others are based on the idea that frequent customers merit special recognition.

But the common theme is that these are not pricing-based ideas. Many retailers and service providers mistake deeper discounts for true loyalty programs, but price incentives only encourage the customer looking for deals to shop around and cherry-pick. It’s time for more merchants to follow the lead of service providers in rethinking the very meaning of their loyalty offers.

Another pricing misstep for JCPenney?

There was a heated discussion on RetailWire recently, focused on reports that JCP has covered up its former EDLP prices with new regular prices…and in some cases the sale prices are substantially higher than the old “fair & square” retails. Most panelists view this as yet another sign of JCP’s demise, but I’m not so sure. What matters most is fixing the stores and product, which should have been Ron Johnson’s first order of business. Here’s my brief comment:

I think JCP needs to get the merchandise content and store experience right first, but I felt that way a year ago before the EDLP experiment. That is still the big challenge facing Mike Ullman and his team, more than the conversion back to promotional pricing.

Pop-up stores: Here to stay?

A brief comment (from a recent RetailWire discussion) follows, on the subject of pop-up stores. What started as a risk-averse strategy to use empty space during the recession is now part of the location-strategy and branding landscape:

The pop-up store may have started as a response to vacant space, but it has evolved into a legitimate strategy. It allows brands to test new design concepts and merchandising strategies without the commitment of a long-term lease — and it provides a laboratory of results that can be rolled out to other stores. And, as the article points out, it’s a great way to create “buzz,” along the same lines as the short-duration designer goods inside Target, H&M and Kohl’s recently.

Bluelight special on data storage?

Sears Holdings has come up with one idea after another about ways to generate revenue from their assets, very few of which have anything to do with improving their retail model. The latest has to do with using Kmart and Sears locations for data storage and as disaster recovery centers. Needless to say, my comments on RetailWire (like most of the other panelists) were not very positive:

Kmart disaster recovery? Sears data storage? Really??

This is the latest example of Sears Holdings management floating a “big idea” to gain traction from its real estate portfolio. Most of these ideas have not turned into reality, but they serve to distract SHLD from the necessary task of investing in its actual brick-and-mortar stores. The quarterly losses and sales declines won’t stop anytime soon with this scattershot approach.