Archive for December, 2013

Santa came late this year

As if any retailer needs more bad publicity around Christmastime, there was plenty of anectodal evidence that stores and websites failed to meet their promise of “by Christmas” delivery. There is plenty of fault to share — and plenty of fingerpointing going on — between the e-commerce sites and the carriers like UPS and FedEx. (And plenty of time to figure out what happened.) While most RetailWire panelists essentially felt that the problem was overblown, I am hearing it turning into a “social networking” problem and I see a bigger narrative at play:

Without getting too deep here, I think the stories of missed deliveries are part of a larger narrative about the failure of our institutions to execute well. Setting aside your point of view about our government, it’s hard to ignore the fact that some of the most trusted brands in America — UPS, FedEx, Amazon, Target and others — have shaken their customers’ faith in their ability to do their fundamental jobs. Whether it’s delivering a package as promised, or protecting your credit card data, this has been a tough couple of weeks — and not just for e-commerce.


More bad news, bad timing for Target

There has been plenty written about the recent security breach at Target and their handling (or mishandling) of both the news and the problem itself. I’ve posted a couple of recent RetailWire comments on the subject:

It’s hard to measure the impact of the security breach on Target’s sales until the company announces its 4th quarter results. Under the circumstances, the company would be smart to be transparent about the impact sooner (at the end of fiscal December) rather than later, since the story broke about a week before Christmas.

Somebody with good access to research data ought to be able to track the impact of these breaches on past consumer behavior. For example, did the TJX security breach several years ago have an impact on their sales? (Obviously not recently.) Or did the identity theft happen over such a long time period that it flew under customers’ radar screens? The Target situation is different in terms of its speed and the “lead story” news coverage it has received in the last several days, especially with the added issue of PIN numbers being compromised.

Now on the subject of crisis management: I would add that the duration of the security breach (from November 27th through December 15th) is a big part of the story. I’m no IT expert, but why and how did Target’s systems allow this to go undetected for so long?

This should be a cautionary tale about how a “best in class” retailer deals effectively — or not so much — with a true crisis management situation. Retailers who have not developed their own contingency plans for this kind of event had better get to work.

Target gives Beyonce the cold shoulder

Most RetailWire panelists agreed with me that Target’s decision not to carry the new Beyonce album (do people still call them albums?) is not a good one, no matter what kind of message the store is trying to send. (As you probably know, Beyonce’s new release came out “under the radar” on iTunes only, and immediately became a best-seller.) Here’s my opinion:

If you’re in the business of selling pop music on CD’s, is it smart to abandon the hottest new release on the market two weeks before Christmas? I’m not so sure that Target is doing itself any favors besides the point that it’s trying to make. Driving sales of wanted merchandise ought to be job #1.

The unintended consequence is that iTunes and other digital sources of music will keep gaining share at the expense of brick-and-mortar stores dependent on a few “exclusive tracks” to sustain an outmoded technology.

Skepticism about another consumer survey

RetailWire panelists just dissected some new survey data, in which consumers included among their “top ten fashion chains” everybody from Nordstrom and Kohl’s to Walmart! The real point (see my comment below) is whether the stores execute their “sustainable competitive advantages” at a high level, not whether they are considered fashion leaders:

I’m not sure how to interpret a “top ten” list that includes everyone from Nordstrom to Walmart among favorite fashion chains. The common denominator among the stores is that each retailer has a distinct set of competitive advantages that is part of its brand position.

Clearly Nordstrom is focused on customer service and “better” product development. Meanwhile Kohl’s pays attention to value and convenience, TJX is all about “the deal” and variety, and so forth. The key lesson is that stores who want to be “favorites” in their segment need to execute their core strengths at a high level.

2013 Promotions: When do retailers hit bottom?

Every year on RetailWire, panelists have a chance to discuss stores’ promotional candence in comparison to previous years. This year’s heavy promotions may have been triggered by the short calendar between Thanksgiving and Christmas — or the perceived weakness in consumer spending — but did retailers go too far this year? Here’s my point of view:

It’s hard to imagine retailers being more promotional this year than in past years, but it does seem that the “layered” discounting (to charge customers, to “friends and family” and so forth) is deeper this year. Some of these events were obviously preplanned, others look like a late reaction to soft Black Weekend sales. (And stores’ e-commerce sites make it much easier to trigger this kind of extra promotion quickly.)

The statistics on apparel selling are interesting, because they would represent a meaningful uptick in discretionary spending. There is no doubt that cold weather is driving better-than-expected sales of coats, sweaters, gloves and boots…but with all the extra discounting ahead of “clearance season,” will stores be asking where the gross margin went?

Macy’s new Thalia brand partnership: Late to the game?

From a recent RetailWire discussion, here are some thoughts about a new brand initiative at Macy’s:

To some degree, the Daisy Fuentes brand was originally targeted to Kohl’s Latina customers as the chain expanded into Texas and the West. But the brand was eventually embraced as an all-store strategy, along with the much bigger rollout of the Jennifer Lopez brand. So Macy’s is late to the party, to some extent.

However, Macy’s has demonstrated expertise in micro-targeting, both in its merchandising messages and in its content by location. (Here in Milwaukee, for example, the two Macy’s locations have far different product focus even though they are 10 miles apart.) The key to the success of the Thalia brand will involve not only placing the goods in the right locations — obviously — but also making the brand look like a well-designed “big idea,” not just a token offering to a growing population segment.

Cyber Week vs. Black Weekend

It’s no surprise that extended hours on Thanksgiving took the wind out of the sails of “Black Friday” volume. (No sense of urgency.) It’s also not shocking that more and more consumers avoid the malls as long as they can get better deals online before or after the holiday weekend. This year’s “Cyber Monday” results were strong, and I comment at RetailWire on the outcome:

I’m not sure you can read too much into the Cyber Monday numbers, except as a counterpoint to the NRF-reported decline in weekend sales across all channels. It’s likely that brick-and-mortar numbers dropped even more, with retailers’ extended hours draining any sense of urgency around Black Friday sales events.

Meanwhile, yesterday’s big number underscores the overall health of e-commerce, even though many retailers have turned “Cyber Monday” into “Cyber Week.” (My e-mail box is full of extended Cyber offers today.) So the same sense of urgency is put at risk, often by the same retailers who mismanaged their brick-and-mortar results over the weekend.