Archive for January, 2015

Praise for Target’s holiday TV campaign

RetailWire ran a weekly series of face-offs comparing holiday TV spots for various retailers. The “finalists” included everybody from PetSmart to Radio Shack. In my view, Target’s campaign came up the winner this year:

There were several effective ads among the weekly winners, but I still vote for the Target commercial as the overall champ. This spot turned out to be the kickoff of a well-sustained, consistently themed campaign that ran through Christmas. The focus on category dominance in toys never got lost in the creative execution, while the ads struck a nice balance between emotion and “attitude.” (See the followup commercial with the “naughty boy” getting a lump of coal in the form of an antique cell phone.) Well done, Target, and consistent with the brand position you are trying hard to recapture.

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Cuba: How soon an opportunity for U.S. retailers?

Without veering into political comment, surely one of the biggest news stories in recent months is the more open relationship between the U.S. and Cuba. It’s interesting to reflect (as in the following RetailWire comment) on what this means for American┬ámarketers:

The chance for American retailers and brands to capture market share in Cuba depends on its residents improving their standard of living in a dramatic fashion. Low take-home pay and other standards of living make it hard to imagine a thriving trade in discretionary goods anytime soon. Last week’s policy moves open the door just a bit, but real progress is going to take years.

Frankly, it’s going to take a regime change committed to economic development even under the umbrella of a so-called “Communist” regime — similar to what has happened in China over the past 40 years — before you start finding a branch of the Gap on the Malecon.

Can McDonald’s stick to a consistent turnaround strategy?

I commented a couple of months ago about McDonald’s struggles to simplify its menu and thus its operations. Today the BrainTrust panel at RetailWire reflects on some “customization” tests going on in Sydney. I believe McD’s needs to get more focused, not less:

I still believe that menu complexity is McDonald’s biggest issue in the U.S. Its brand positioning should continue to stand for “consistent, affordable and fast.” So a touch-screen offering more customization — instead of fewer choices — is not a solution to the problem. Neither is the wait time added by having meals brought to the table, Culvers-style. (And just picture the breakdowns at the drive-through lane.)

Most of the operating improvements discussed recently by McDonald’s are focused exactly in the right place — narrowing the assortment of food offerings and simplifying the operation. Trying to squeeze into the increasingly crowded brand space of the “better burger” chains would not be the right move.

JCP reveals an upside surprise

Yesterday (Jan. 6th, 2015) JCPenney discussed a comp-store gain of almost 4% during the November-December period. This is a positive surprise considering flat expectations after the last earnings call. RetailWire panelists discussed what further challenges face JCP, and I offered the following point of view:

JCP has focused on error correction to undo a lot of the damage inflicted during the Ron Johnson era. (I’ve described it as “Turn back the clock.”) The holiday sales report is a good upside surprise, considering the flat 3rd quarter and suggestion (on the last earnings call) that November started off slowly. These numbers probably bode well for other retailers, too, especially if they had soft 2013 comparisons.

I’m still not convinced, however, that JCPenney has it all figured out. They may have hit on the right promotional cadence, but the merchandising (especially in the women’s zone) looks overassorted, as it did back in 2010-11. And the company under its new leadership will need to take more aggressive steps to address its uncompetitive SGA model, not just relying on rising gross margins.

As BOPIS spreads, can stores handle it?

RetailWire panelists had a couple of chances during the holiday season to comment on the spread of BOPIS (“Buy online, pickup in store”) among many chains trying to expand their omnichannel footprint. Many of the comments focused on stores’ ability to execute BOPIS, at the same time that they are dealing with holiday traffic and breaking assortments. I’ve combined several posts on this topic below.

First, on the topic of BOPIS and late-deadline “ship from store” initiatives:

BOPIS is less risky only if the brick-and-mortar store has the item that the customer wants. It’s likely that online shoppers will start to see limited availability in stores as assortments start to break before Christmas. This puts the expectation back onto the e-commerce fulfillment capacity, so there is some risk involved in overreliance on BOPIS.

Are retailers playing with fire? Of course, but it’s not a surprise that everyone wants to be the “last one standing” with the latest possible order dates and the best shot at a little more market share. Hopefully the weather over the next week will be less disruptive than in 2013 — and the retailers have had a year to plan and partner more effectively with the major carriers.

Second, on the topic of payroll hours needed to execute BOPIS effectively:

I’ve raised red flags about this issue several times this year, as the practice has spread. Omnichannel retailers run the risk of overburdening their brick-and-mortar locations in a few key ways:

First, is the staffing adequate to take care of customers who have actually driven to the store to buy something, on top of processing e-commerce goods? Second, are assortments on seasonal goods starting to break (as they should about a week before Christmas), making it more difficult to fulfill web orders? Finally, are the logistics of getting goods from random store locations to the customer more difficult to coordinate with the big carriers?

As the Target exec says in the Wall Street Journal article, everybody has a lot to learn this year, especially when layered on top of BOPIS initiatives and healthy store traffic to begin with.

And, finally, whether BOPIS represents a time saver for the customer…and whether it matters:

It’s not about saving time vs. a random trip to shop for the same item, so the time study cited is missing the point. The perceived benefit of BOPIS is the assurance that the wanted item is in fact going to be in stock, and set aside for the customer when it’s convenient for him or her to make the visit. Many websites can indicate whether an item is “in stock” in a nearby store, but there is not a 100% guarantee of accuracy, nor a promise that the item will be easy to locate within the store. After all, the customer can’t find an item in the stockroom or on a storage trailer!


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