JCP finally names a new CEO

Just a few days after JCPenney held its “analysts’ day” in New York — and left unanswered the question of succession planning — it announced yesterday the appointment of Marvin Ellison, the senior store executive at Home Depot, to succeed Mike Ullman next year. Here’s my comment from today’s RetailWire discussion:

There is some comparison being made between Mr. Ellison and Brian Cornell, the new CEO at Target. Mr. Cornell was also praised for his operational background (especially given Target’s data breach and missteps in Canada). But he also identified merchandise categories that will help Target the brand differentiate itself from more “consumables”-oriented competitors.

Yes, Mr. Ellison is faced with some operational challenges — and, in particular, he needs to attack the store count and bloated SGA more aggressively. (This was a big unanswered question at the JCP analysts’ meeting last week.) And “blocking & tackling” becomes more important in an omnichannel environment, with competitors like Amazon who are experts at logistics.

But, at the end of the day, any new leadership at JCP needs to redefine the meaning of the brand without repeating the mistakes of the Ron Johnson era. Right now, JCP is in an “error correction” mode, but turning back the clock to 2010 can only get you so far. Let’s see if Mr. Ellison is up to the task.

Thanksgiving hours: Stores continue to push the envelope

Just like the last post (about the NRF), there seems to be annual chatter about whether stores are opening too early for Black Friday weekend. (And “Friday” is clearly a misnomer.) In a few short years the commonplace opening time has gone from 5am to 3am to midnight to 8pm (last year) to 6pm (this year), if Macy’s internal announcement is any guide. Most of my fellow RetailWire panelists agree with me on this one:

Macy’s crocodile tears about this decision (it wasn’t easy, competitive pressures, and so on) get more disingenuous every year. Let’s be frank: Macy’s is by far the largest department store retailer in the country and one of the biggest general merchandise stores of any kind. So there is no point in being defensive about a decision to open earlier and earlier every year just because “the other guys made us do it.” Macy’s has the ability to set the tone for the industry — and to leverage its omnichannel initiatives — instead of just being a “follower.”

As I noted last year — when 8pm openings became more common — it is inevitable that many retailers will not close for Thanksgiving at all, and that day is not too far away. It’s smart brand positioning (and good employee relations) for stores like Nordstrom to keep away from the whole idea of opening on Thanksgiving Day.

NRF: Blue skies ahead for holiday 2014?

This is probably not the first time that a RetailWire discussion on the topic of the National Retail Federation has shown up on this blog. The NRF has a habit of being optimistic, not matter what the headwinds or external circumstances. Here’s my viewpoint:

It’s as predictable as tomorrow’s sunrise that the NRF will issue an optimistic forecast for the holiday season. They are correct about some tailwinds (improving employment, lower gas prices), and consumer sentiment measures appear to be on the uptick, but there is no consistent trend yet. The economy needs to “raise all boats” before we can expect this kind of result.

As long as sales of electronics (other than the new iPhone) and apparel continue to be soft, it’s hard to see where the 4% increase is coming from. But there will be some clear winners: Stores like Costco with a strong existing trend, stores like Target with easier comps, companies who lost traffic last year due to weather, and retailers who execute their “omnichannel” logistics better than last year’s fiasco.

Sears Canada: One more ominous sign

Sears Holdings is always good fodder for RetailWire panel discussions, and the announcement that SHLD is selling its share of Sears Canada (to its own shareholders?) is no exception. Here’s my point of view:

Where to start? How about at the endpoint of the commentary, where Sears can only be saved by a “master merchant”? If the last ten years have taught observers of Sears anything, it’s that Mr. Lampert will not cede authority to anybody else, as long as he feels he is a “master merchant” himself. And with a number of other companies looking for new leadership (starting with JCP), why would any “master merchant” take on the challenge of a company whose real CEO refuses to invest in the business?

I haven’t shopped Sears Canada for several years, but at one time it was a credible quality alternative to The Bay. (I believe this is no longer true.) The idea of selling the company to its existing shareholders is akin to the recent “loan” from ESL hedge funds to Sears Holdings. It’s a Band-aid where a tourniquet is probably required.

Finally, it’s worth noting in the Wall Street Journal coverage that one company insuring vendors against Sears’ non-payment is canceling its coverage as of October 6th. How many smaller vendors will cut off shipments for 4th quarter, and will the downward spiral accelerate?

EBay and PayPal: Going their separate ways

In some segments of the corprate world, “smaller is better” seems to be the latest trend. (HP’s recent announcement is one example, although there is always contrary evidence like the planned Comcast/TimeWarner deal.) Case in point: The announcement that EBay will split off its PayPal subsidiary, in order for the two companies to focus separately on their core businesses. Here’s my comment from a recent RetailWire discussion:

PayPal has been growing faster than EBay’s heritage “Marketplace” business, and will be unsaddled by debt upon its separation. (Full disclosure: My son works at Braintree, the mobile-payments company acquired recently by PayPal.) If you believe that the mobile payment industry is about to explode, this is good news for PayPal. And the threat of Apple Pay is overstated, since PayPal (or Braintree) clients will generate revenue with every iPhone-enabled transaction.

The longer-term speculation — about either EBay or PayPal or both becoming acquisition targets themselves — is a valid one. Companies like Google and Amazon continue to compete against Apple and other providers of “one-stop shopping” technology.