Archive for August, 2013

Tuesday Morning exits e-commerce: Good call?

Tuesday Morning, the off-pricer specializing in an array of home and seasonal goods, announced recently that it is exiting its e-commerce business. I don’t think it’s a bad call, and I voiced my thoughts on RetailWire:

As a fellow panelist pointed out, it’s a “requirement” to offer e-commerce only if you can make money at it over the long haul. Few companies can afford the sort of investment spending that drained profitability from Amazon for years while it built market share, but of course Amazon is a web-only play for now.

If Tuesday Morning found that it could not execute e-commerce well — because of the unpredictability of its merchandise flow — then it was probably detrimental to the brand. The brick-and-mortar customer may tolerate a “treasure hunt” in the store, but the e-commerce customer has different expectations. This will be an interesting case study for how TJX plans to re-enter the omnichannel fray.


JCP: Ackman stirs up trouble for the CEO and the company

News broke yesterday that Bill Ackman, who owns the largest share of JCPenney stock, voiced his unhappiness at the speed of the search to replace Mike Ullman as interim CEO. The rumor also escaped that former CEO Allen Questrom was willing to assume the chairman’s role (not the CEO job) if JCP hires the right chief executive. RetailWire panelists (like me) had a chance to weigh in on the latest JCP drama today:

Bill Ackman is starting to look like the Eddie Lampert of JCP. Yesterday’s pronouncement makes Mike Ullman a lame duck despite his best over the past four months to correct some of the Johnson-era promotional mistakes and to stop the cash bleeding. Why would anybody expect the lousy sales trend to turn on a dime, considering that Ullman inherited the bad inventory and shop concepts that Ron Johnson put in place? The home store in particular looks over-curated, overpriced and under-merchandised.

Nobody is likely to accept a CEO position at JCP as long as Ackman is looking over one shoulder and Allen Questrom (a great retailer) over the other, because he or she will have no real authority. This is the Sears saga all over again, and it’s worth noting the other high-profile executives (including Howard Schulz of Starbucks) who have stood up for Ullman.

If Ackman made good on his “threat” to dump his 18% ownership of JCP, the shares flooding the market would probably drive the stock price even lower over the short run, but it may be in the best interest of Penney’s ability to survive for the long run.

Target tests more staffing in the infant department

From RetailWire, my point of view about a news story that Target is testing more staffing in its infant department. It’s a small-scale test, so there is no harm in experimenting — something that Target is known for:

A ten-store test is a relatively risk-free way for Target to study the economics and payback of the extra expense vs. incremental sales. But the store needs to be careful about expanding full service areas too fast or too broadly, if it is also committed to competitive pricing and cost management. (And the Geek Squad test was ended, as RetailWire reported a few months ago.) Areas like cosmetics seem to demand at least some assisted self-selection, if Target plans to gain share vs. competitors like Sephora and the big drug chains.

How robust is JCP’s e-commerce business?

RetailWire panelists were mostly skeptical about a study by Experian (the big credit rating firm) ranking JCP as #2 among retailers for the overall strength of its Back to School e-commerce business. Here’s my point of view:

I’m dubious about the Experian data and would like to see other studies backing it up. Just to cite one example, it’s hard to see why Target — a much bigger company with a more robust business in BTS categories — would be surpassed by JCPenney in its recovery mode.

The JCP turnaround story (and stock price) was unfortunately clouded yesterday by apparently incorrect reporting about credit issues. (Inaccurate reporting and the New York Post…enough said.) There is evidence that JCP traffic counts and comp sales are starting to improve against terrible 2012 comparisons, but there is also evidence in the stores that the company has a long way to go. Outside of a few pockets of merchandise strength, such as school uniforms, there is not enough conviction in areas like dorm room supplies, even in much-touted areas like the new Home Store.

Market research: One size fits all?

RetailWire panelists discussed one of our colleague’s argument that traditional marketing research does not include enough behavioral observation. I don’t completely agree:

It’s hard to argue with Joel’s premise that there is more room for behavioral study in marketing research. At the same time, it’s hard to paint “market research” with such a broad brush, since it’s driven by many different methodologies. Surely a lot of good market research is driven by behavioral observation in the field, just as other good research is drawn more from data about demographics, shopping history, etc.

It’s also important to keep some historical perspective about the risks of “research overreach.” Apple, for one, has been famously averse to market research before introducing products like the iPhone, iPad, and so forth. More behavioral research might have led a more cautious company to scrap these products before their launch.

Hudson’s Bay makes a play

The rumored combination of Saks and Neiman Marcus was just that…a rumor. It was laid to rest by the announcement this week that Canada’s Hudson Bay Company — already owners of Lord & Taylor — is acquiring Saks Fifth Avenue. My comment from RetailWire follows:

While the HBC deal represents some expansion opportunity for Saks “north of the border,” the bigger impact will be on the mix of Saks and L&T locations here in the U.S. HBC should have at least some ability to switch nameplates from Saks to L&T (or vice versa) depending on lease terms, store profitability and mall demographics. The back-of-the-house cost efficiencies ought to be a win for all three stores, too.